India and Chile to Begin Talks on Comprehensive Economic Partnership Agreement

(Source – Indian Express, Section – Economy, Page – 15)

Analysis of the news:

India-Chile Talks on Comprehensive Economic Partnership Agreement (CEPA)

• India and Chile have announced the initiation of talks to establish a Comprehensive Economic Partnership Agreement (CEPA), focusing on critical minerals such as lithium and copper.
• These minerals are essential for electric vehicle (EV) battery production, making Chile, with the world’s largest lithium and copper reserves, a key partner in the global supply chain.
• Prime Minister Narendra Modi highlighted that the agreement would focus on strengthening resilient supply chains and value chains in critical minerals, areas in which both nations are keen to collaborate.

Growing Bilateral Trade

• India-Chile trade has been steadily growing, with bilateral trade reaching $3.8 billion in 2024, up from $1.5 billion in 2020.
• Chile is India’s fifth-largest trading partner in South America, with copper and related products making up a significant portion of imports.
• India’s exports to Chile mainly consist of automobiles and pharmaceuticals. Despite challenges such as the 2014 carbon tax on diesel vehicles, India’s exports have recovered, demonstrating the resilience of trade relations between the two countries.

Focus on Critical Minerals and Green Mining Investments

• The focus of the CEPA talks will be on securing a stable supply of critical minerals for India’s growing EV, renewable energy, and electronics sectors. Chile’s rich reserves of copper and lithium are crucial for India’s manufacturing ambitions in these areas.
• In addition, India is keen on exploring mining investments in Chile, both in existing and new mining projects, to strengthen bilateral and business-to-business (B2B) partnerships.

Historical Trade Agreements

• The CEPA talks build upon a 2016 agreement to expand the India-Chile Preferential Trade Agreement (PTA), which increased the number of tariff lines from 474 to 2,829.
• This expanded agreement has helped foster a more robust trading relationship. India’s National Critical Minerals Mission (NCMM) further supports this initiative, aiming to secure the materials needed for India’s evolving industries.

Future Prospects

• India and Chile’s growing economic partnership is expected to deepen with the potential for further investments in Chile’s mining sector, particularly in lithium exploration.
• The visit of Chile’s President Gabriel Boric to India signals a commitment to enhancing cooperation across various sectors, including digital infrastructure, renewable energy, and space.
• As the relationship between the two nations strengthens, the CEPA could pave the way for greater trade liberalization and deeper economic integration.