The Peru-India Free Trade Agreement would boost Peruvian exports and open up investment opportunities, particularly in key sectors such as mining and agriculture. If finalized, this agreement could position Peru ahead of its regional competitors.
The Peru-India Free Trade Agreement that Peru is negotiating could significantly reshape trade relations in the region, leading to substantial changes in investment and export flows. As the Asian giant expands its economic influence, the effects of this deal could shift the trade priorities of neighboring countries, including Chile, which will need to observe closely how this pact might alter regional dynamics.
Peruvian authorities are targeting the first half of 2025 as a crucial period for finalizing an agreement that could yield substantial benefits for exports and foreign investment.
Peruvian Foreign Minister Elmer Schialer was evident late last year when he stated that India would be a key partner for Peru. “We aim to have a Free Trade Agreement approved by both parties very early next year (2025). And this will be something spectacular,” he said.
These words reflect the optimistic outlook of Peruvian authorities regarding what they see as a vital agreement for the country’s economic growth. India, with a population of 1.45 billion, represents a market with enormous expansion potential for Peruvian exports.
Political Will
From the perspective of Minister of Foreign Trade and Tourism Desilú León, the Peru-India Free Trade Agreement is not only a priority for Peru but also potentially transforms its trade relationship with India.
During her recent visit to New Delhi, the minister emphasized that India’s political will aligns with Peru’s interests. “We have the political will of Indian authorities to move forward more quickly and accelerate this Free Trade Agreement,” León stated after meeting with India’s Minister of Commerce and Industry, Piyush Goyal.
Despite initial challenges, the Peruvian government has taken significant steps to revive negotiations that had stalled in 2024 due to political changes.
The Peru-India Free Trade Agreement would create new trade opportunities and facilitate a more aggressive expansion of Peruvian exports. In numerical terms, Peru’s exports to India have grown significantly in recent years, reaching approximately $4.7 billion in 2024. Gold, copper, and silver dominated the trade exchange, but Minister León stressed the importance of expanding exports into the agricultural sector. “With this Free Trade Agreement, new opportunities will open up, particularly for our agricultural sector,” she said.
“Enormous Demand”
Mónica Muñoz Nájar, an economist at the Network of Development Studies, provided key insights into the agreement’s potential. In an interview with RPP, she highlighted that India, one of the largest and fastest-growing economies, presents an “enormous demand” for agricultural products. However, she noted that Peru supplies only 0.7% of that demand.
This underscores the urgent need for the Peru-India Free Trade Agreement to lower tariffs, which are currently high and limit the competitiveness of Peruvian exports, particularly in products like cocoa, which faces tariffs of up to 39% in India. “If a trade agreement is reached that results in these tariffs being decreased, we would be looking at better conditions, and undoubtedly, our trade with them could expand,” the expert explained.
Peru’s agricultural sector has vast potential, especially considering that India—one of the world’s largest markets—has a growing demand for fruits, grains, and vegetables. However, Muñoz Nájar cautioned that current trade barriers, such as high tariffs on agricultural products, limit Peru’s ability to access this market.
The Peru-India Free Trade Agreement could significantly reduce these tariffs, enabling Peru to compete under more favorable conditions. The agreement could also facilitate importing Peruvian products such as blueberries, avocados, and grapes, which are gaining popularity in international markets.
New Investment Sources
Signing the Peru-India Free Trade Agreement would increase exports and provide access to new sources of investment for the Peruvian economy. During her visit to India, Minister León met with several entrepreneurs interested in investing in mining and agribusiness projects in Peru.
“We have investors interested in many of our mining projects, and we also have agribusiness investors looking to set up plants here in the country,” the minister explained.
This is crucial, as the FTA with India could attract new companies seeking to capitalize on preferential access to the Indian market, making Peru an even more attractive destination for foreign investment.
The Peru-India Free Trade Agreement also fits within a broader geopolitical context. India has played an increasingly significant role in global trade over the past few years. At the same time, China and the United States remain locked in a trade war that affects global economic stability. In this sense, the agreement between Peru and India could provide a strategic alternative for Latin American countries looking to diversify their trade relationships beyond traditional global powers.
Chile, for its part, should carefully monitor these developments. Suppose Peru succeeds in finalizing this agreement in the coming months. In that case, it will establish itself as a key partner for India and gain significant advantages over other countries in the region in terms of access to Asian markets.
Regarding the sectors that would benefit the most from this agreement, mining products will continue to play a crucial role in Peru-India trade. However, the deal could diversify Peruvian exports, benefiting Peru and other regional players, including Chile and Brazil. If Peru fully capitalizes on the Peru-India Free Trade Agreement, it could overcome trade barriers that limit access to emerging markets, such as India. Moreover, its relationship with India could boost trade in non-traditional sectors such as digital economy services, manufacturing, and tourism.
Chile, which has historically maintained strong trade ties with Peru, will likely watch how this FTA affects its competitiveness. While both countries compete for similar markets, the Peru-India Free Trade Agreement could give Peru a significant advantage in accessing new opportunities, particularly in the agricultural sector. In this context, Chile and other South American nations should remain vigilant to emerging opportunities and explore new strategies to sustain their competitiveness in international markets.
Looking Ahead: The Timeline
Minister Desilú León has been evident in outlining the next steps. During recent talks, she emphasized that the Peru-India Free Trade Agreement could be finalized in 2025 if negotiations progress as planned. For the Peruvian government, the priority is to negotiate the agreement quickly and seize opportunities before other countries in the region reach similar deals.
“If we move forward, as Minister Goyal has publicly stated, by placing greater emphasis on and accelerating our work, I believe we could finalize it this year,” León said.
In commercial terms, the Peru-India Free Trade Agreement would lead to greater diversification of Peruvian exports and solidify the country’s position in the mineral market, which remains the backbone of its economy. Peru is one of the world’s top mineral producers, and India, as a significant metal consumer, represents a key partner. However, reducing tariffs could enable Peru to enter high-potential markets for food products and textiles.
As the negotiations progress, the potential impact of the Peru-India Free Trade Agreement extends beyond Peru and India. It could alter regional trade dynamics, prompting other countries to reassess their trade strategies. Chile, in particular, should pay close attention to how this agreement might reshape the competitive landscape in Latin America.