India, Brazil-led bloc to begin talks in next few months to expand trade pact: Govt sources

Government sources have told CNBC-TV18 that formal negotiations to expand India’s Preferential Trade Agreement (PTA) with the Brazil-led MERCOSUR bloc are expected to begin in the coming months. Sources said MERCOSUR members are aligned in favour of an expanded PTA to deliver quicker results. The bloc comprises Brazil, Argentina, Paraguay, Uruguay and Bolivia. India’s Joint Administrative Committee meeting with MERCOSUR was held on November 27.

In October, officials indicated that India prefers widening

the existing PTA—currently covering around 450 tariff lines—rather than pursuing a full-fledged Free Trade Agreement (FTA), which could take longer due to the need for consensus among all five MERCOSUR partners. The India-MERCOSUR PTA has been in force since 2004.

In August 2025, India and MERCOSUR held a virtual meeting to finalise a Standard Operating Procedure and prepare a feasibility study for a potential FTA. India is exploring new export destinations to cushion the impact of slowing demand in developed economies and US tariffs. Earlier this year, Prime Minister Narendra Modi met the presidents of Brazil, Argentina and Paraguay.

Officials say Latin American nations, keen to diversify trade ties, view India as a major growth market. India, in turn, sees limited risk in opening its market to the region, given the smaller product range and volumes involved, which are unlikely to hurt domestic industry. Options on the table include expanding the PTA from 450 tariff lines to as many as 4,000, or negotiating a full-fledged FTA with provisions on skilled-worker mobility and rules of origin to prevent third-country dumping and trans-shipment.

MERCOSUR countries account for more than 67% of South America’s economic output. South America’s collective GDP is $4.38 trillion, of which MERCOSUR economies represent $2.94 trillion.

Sources added that internal discussions within the bloc on moving from a PTA to an FTA are underway. A broader FTA would give Indian exporters improved access to large MERCOSUR markets and open doors to the Caribbean and Pacific regions, many of which use MERCOSUR nations as trans-shipment hubs.