For decades, Latin America sat at the margins of India’s economic imagination. The distance was geographic, but it was also psychological. Today that picture is changing fast. With a combined GDP of over USD 6 trillion and vast reserves of copper, lithium, and crude oil, the region has become a serious destination for Indian goods, services, and capital. Understanding how these economic ties developed, and where they are headed, reveals a quietly important chapter in India’s search for new markets and partners.
Table of Contents
- How economic liberalisation opened the door
- The Focus LAC programme
- Building the trade architecture: PTAs with Mercosur and Chile
- The India-Mercosur PTA
- The India-Chile PTA
- Indian investment in the region
- Information technology
- Pharmaceuticals
- Mining, energy, and manufacturing
- India’s approach versus China’s
- A second anchor, not a replacement
- Where the relationship stands today
How economic liberalisation opened the door
The story really begins in 1991. Before then, trade between India and the Latin American and Caribbean (LAC) region was almost negligible. As recently as 1991-92, two-way trade was worth less than USD 500 million. Both economies were largely inward-looking, separated by protectionist policies and limited diplomatic attention.
India’s economic reforms changed the calculus. As Indian industry opened up and began searching for export markets beyond the traditional partners in the West, Latin America emerged as a natural outlet. The region offered exactly what a liberalising economy needed: raw materials and energy to feed industrial growth, and large consumer markets hungry for affordable goods. Latin American governments, in turn, were drawn to India’s expanding market and its rise as a technology power.
The Focus LAC programme
The most concrete early step came in 1997. India’s Department of Commerce launched the Focus: LAC programme, a trade promotion scheme designed to push Indian exporters towards the region. The programme provided finance and assistance for Indian exporters to Latin America and worked in partnership with the private sector.
Its objectives were practical. The programme aimed to disseminate information among Indian businesses about export potential, organise seminars and buyer-seller meets, and coordinate participation in trade fairs across the region. The results were striking. Indian exports increased elevenfold over the next ten years, and by 2004 two-way trade had reached USD 3 billion.
Building the trade architecture: PTAs with Mercosur and Chile
Trade promotion alone was not enough. To give exporters a real advantage, India negotiated Preferential Trade Agreements (PTAs) with key players in the region. These agreements lower tariffs on selected products, making Indian goods cheaper and more competitive.
The India-Mercosur PTA
Mercosur is South America’s largest trading bloc, comprising Argentina, Brazil, Paraguay, and Uruguay. India signed a PTA with Mercosur in 2004, and it became operational from 1 June 2009. Under the agreement, both sides offered tariff concessions ranging from 10% to 100% on roughly 450 products each.
The scope, however, remains modest. There is growing recognition on both sides that the agreement needs expansion. India and Brazil recently agreed to significantly expand the Mercosur PTA, focusing on increasing the share of trade covered by tariff preferences and tackling both tariff and non-tariff barriers.
The India-Chile PTA
The agreement with Chile has followed a more ambitious path. The original PTA was signed in March 2006 and came into force in 2007. It was later expanded substantially. Under the expanded PTA, Chile offered concessions on 1,798 tariff lines while India offered concessions on 1,031 tariff lines, with the deal covering around 86% of India’s exports to Chile.
This matters because of what the two countries trade. India sends pharmaceuticals, transport equipment, textiles, and engineering goods, while Chile supplies critical inputs like copper ore, lithium carbonate, and molybdenum, minerals essential for India’s manufacturing and clean-energy ambitions.
Indian investment in the region
Trade tells only half the story. Over the past two decades, Indian companies have steadily built a physical presence across Latin America. Indian firms have invested roughly USD 12 billion in sectors such as IT, pharmaceuticals, energy, mining, manufacturing, and agro-chemicals.
Information technology
IT services are perhaps the most visible Indian footprint. Firms like Tata Consultancy Services set up delivery centres across the region early on. Crucially, this investment creates local jobs. Indian IT companies, both small and large, employ around 25,000 people in Latin America, nearly all of them locals. This is a significant point: Indian investment is not extractive but generates employment and skills within host economies.
Pharmaceuticals
India’s reputation as the “pharmacy of the world” extends firmly into Latin America. India has exported more pharmaceutical drugs to Latin America than China for most of the 21st century, and 27 Indian pharmaceutical companies operate manufacturing units in the region. Companies like Glenmark and Torrent draw a meaningful share of their global revenue from markets such as Argentina, Brazil, and Mexico.
Mining, energy, and manufacturing
Indian firms have also moved into resource and manufacturing sectors. The Indian agrochemical company UPL is a striking example: UPL earns more revenue from Brazil than from India, while Bajaj is the market leader for motorcycles in Colombia and much of Central America.
Not every venture has succeeded. Jindal Steel and Power’s ambitious investment in Bolivia’s El Mutún iron ore mine ended in a contract cancellation and legal dispute, a reminder that doing business across continents carries real risks. Indian investment in the region peaked around 2012, after which some companies sold operations or pulled out, even as smaller and mid-sized manufacturers expanded. The trajectory has been one of trial, adjustment, and gradual consolidation rather than uninterrupted growth.
India’s approach versus China’s
One of the most interesting features of India’s engagement is how different it looks from China’s. The contrast is instructive for anyone trying to understand India’s foreign economic strategy.
China’s presence is enormous and state-directed. Chinese trade with Latin America has grown roughly thirty-five-fold since 2000, dwarfing India’s footprint. Beijing operates through formal white papers, high-profile political visits, and investment strongly backed by the state.
India’s model is almost the opposite. While China’s relationship is government-led and politically driven, India’s engagement is propelled mainly by the private sector and economic diplomacy, with investments concentrated in value-added sectors like pharmaceuticals, IT, and automobiles rather than the extractive industries and infrastructure that dominate Chinese spending.
This difference has real consequences for Latin American economies. There is concern that deepening ties with China reinforce the region’s dependence on exporting raw commodities, whereas closer links with India could push the region in the opposite direction by engaging its value-added sectors. For Latin American partners, Indian investment offers a way to diversify away from commodity dependence and build local manufacturing and technology capacity.
A second anchor, not a replacement
This nuance is becoming more visible in strategic sectors. As global supply chains realign, Latin American producers increasingly see India as a useful alternative buyer. Around 70% of Indian foreign direct investment in Latin America flows into Brazil, with India’s investments described as market-driven and propelled by the natural growth of its own enterprises rather than a top-down strategic push. India is positioning itself not as a rival hoping to displace China entirely, but as a complementary, mutually beneficial partner.
Where the relationship stands today
The numbers reflect how far things have come. India’s trade with Latin American countries stood at about USD 35.73 billion in 2023-24, according to the Ministry of Commerce and Industry’s LAC Division. High-level political engagement has also intensified, signalling a more deliberate strategy.
India increasingly frames this relationship within its broader vision of South-South cooperation and Global South solidarity. India works with regional bodies like CELAC, CARICOM, and SICA, offering capacity-building programmes, digital governance solutions, and cooperation in healthcare, while positioning itself as a reliable development partner. Shared membership in groupings like BRICS and the G20 further smooths the path for trade and investment.
Challenges remain. The PTAs are still narrow compared to India’s comprehensive agreements with partners in Asia, regional integration within Latin America is uneven, and the sheer distance raises logistics costs. But the foundation built since 1991, from the Focus LAC programme to expanding trade agreements and a growing corporate presence, gives the relationship genuine momentum.
What do you think? Does India’s private-sector-led, value-added model of engagement offer a more sustainable path for Latin American economies than China’s state-backed, commodity-focused approach? And should India prioritise upgrading its modest PTAs into full free trade agreements to keep pace with the region’s growing strategic importance?
References
- https://www.americasquarterly.org/fulltextarticle/the-other-bric-in-latin-america-india/
- https://www.thegeostrata.com/post/bridging-continents-evolution-of-india-latin-america-relations
- https://www.commerce.gov.in/international-trade/trade-promotion-programmes-and-schemes/international-trade-focus-lac/
- https://www.commerce.gov.in/international-trade/trade-agreements/indias-current-engagements-in-rtas/mercosur-preferential-trade-agreement-pta-negotiations/
- https://www.tribuneindia.com/news/business/india-brazil-agree-to-expand-preferential-trade-agreement
- https://www.commerce.gov.in/international-trade/trade-agreements/india-chile-pta-preferential-trade-agreement-pta-with-chile/
- https://www.pmindia.gov.in/en/news_updates/expansion-of-india-chile-preferential-trade-agreement/
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- https://ambassadorviswanathan.com/business-with-latin-america
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- https://www.india-briefing.com/news/india-latin-america-trade-investment-outlook-2026-41757.html/
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