India and Peru aim to finalize FTA in 2025

India and Peru are advancing toward a free trade agreement (FTA) expected to be finalized in 2025, which would strengthen their growing economic relationship. Bilateral trade between the two nations has seen consistent growth, driven largely by gold exports to India, with exports to India reaching US$ 3.5 billion between January and September 2024 alone. An FTA could further enhance this trade by reducing tariffs and providing greater market access, benefiting key sectors in both countries.

For India, the FTA presents an opportunity to increase exports of vehicles, cotton, and pharmaceuticals, while Peru stands to gain new markets for its minerals, agricultural products, and processed foods. As the world’s third-largest copper producer, Peru aims to diversify its trade partners and reduce dependency on individual markets. The FTA aligns with Peru’s broader strategy to expand its global partnerships, building on existing agreements and actively seeking trade ties with major economies across Asia.

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The seventh round of India-Peru Trade Agreement negotiations took place in New Delhi from April 8 to April 11, 2024, with discussions aimed at understanding each country’s priorities and concerns to achieve a mutually beneficial agreement. Key topics covered included trade in goods and services, movement of natural persons, rules of origin, sanitary and phytosanitary measures, customs procedures, trade facilitation, and dispute resolution.

India now stands as a pivotal trade partner for Peru, and a free trade agreement (FTA) between the two nations could reinforce Peru’s economic ties with South Asia. Expected to be finalized in 2025, this FTA would add India to Peru’s roster of key trade allies, following the successful agreement with China in 2009. The negotiations with India, paused briefly for Peru’s 2024 elections, are set to resume, with Peruvian Minister of Foreign Trade and Tourism Ursula Leon aiming for completion next year.

Bilateral trade between India and Peru has been on a steady rise, fueled primarily by gold exports from Peru to India. From January to September 2024 alone, Peru’s exports to India surged by 77 percent, reaching an impressive US$ 3.5 billion. This robust growth highlights the strengthening economic ties between the two nations. An FTA could further accelerate this trend by reducing tariffs and enhancing market access on both sides, benefiting key sectors.

While Peru’s gold exports play a significant role in this trade relationship, an FTA would also expand scope for for India’s top exports to Peru, which include vehicles, cotton, and pharmaceutical products. These sectors could experience notable gains, as improved access and reduced trade barriers create new opportunities for Indian products in the Peruvian market.

Peru is already the world’s third-largest copper producer, it is seeking to broaden its trade partnerships. Strengthening ties with major Asian markets like India aligns with Peru’s strategy to diversify its export destinations and reduce dependency on specific partners. An FTA with India would also open fresh opportunities for Peruvian exports, including minerals, agricultural products, and processed foods, potentially transforming market access for these sectors.

Alongside its engagement with India, Peru is also working on FTAs with other nations like Indonesia and updating its agreement with China. Looking ahead to 2025, these initiatives mark Peru’s commitment to diversifying trade and securing economic growth through robust global partnerships.