Peru and Chile are important destinations for India as it seeks to diversify its export markets with a focus on Latin America to reduce reliance on traditional partners, including the US, the EU and China
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The China-factor is casting a shadow over India’s negotiations for free trade agreements (FTAs) with Peru and Chile, sources have said.
While India is keen to expand its footprint in Latin America through FTAs with the two countries, it needs to negotiate hard for stringent rules of origin to stop Chinese goods getting re-routed and dumped into the Indian market using the trade pacts, a source tracking the matter told businessline.
“India is already worried about Chinese manufacturers misusing the India-AseanFTA to re-route their goods into the Indian market. The Commerce Department is very conscious of a similar risk in case of the proposed FTAs with Peru and China and thus wants to step carefully,” the source said.
‘Need to prepare well’
New Delhi is set to hold the second round of FTA talks with Chile, and the eighth round of talks with Peru (which got stalled for some time as India recalibrated its FTA strategy) in August and Indian officials are preparing for the travel.
“Both Peru and Chile are eager to conclude the FTA with India fast. But India has to prepare well for the talks. It needs to protect its defensive interests and also guard against third country dumping, particularly from China. So, all necessary safeguards need to be incorporated,” the source said.
India also wants to scrutinise the list of demands from both countries to ensure that the items for which market access is being sought is actually manufactured in Peru and Chile, and is not just a couched demand from China, the source added.
Peru and Chile are important destinations for India as it seeks to diversify its export markets with a focus on Latin America to reduce reliance on traditional partners, including the US, the EU and China. In FY25, India’s exports to Latin America at $15.17 billion was just about 3.5 per cent of its total exports, while its exports to Chile was at $1.15 billion and to Peru was $ 1 billion
China’s presence
China, on the other hand, has a huge presence in Latin America , which is a point of great concern for India. It signed an FTA with Chile in 2005 and one with Peru in 2009 which has been upgraded over time resulting in duty-free/low duty access for a variety of Chinese goods into these markets.
In 2024, Peru imported goods worth $14.53 billion from China, which accounted for 28 per cent of the country’s total imports. China’s exports include electronic and information technology equipment, steel products, vehicles, and clothing, among other things. Chile’s imports from China in 2024 were higher at $20.65 billion.
“India has to prepare hard to fight for a strict ROO in the two FTAs, as these determine which items should qualify as goods originating in the FTA partner country, and hence get preferential access. ROOs are lie firewalls. Although the world is moving towards liberal ROOs, India has to protect its interests,” the official said.
Published on July 20, 2025
