As a follow up to the Framework Agreement, a Preferential Trade Agreement (PTA) was signed in New Delhi on January 25, 2004. The aim of this Preferential Trade Agreement is to expand and strengthen the existing relations between MERCOSUR and India and promote the expansion of trade by granting reciprocal fixed tariff preferences with the ultimate objective of creating a free trade area between the parties.

          The India-MERCOSUR PTA provides for five Annexes. These five Annexes have been signed between the two sides on March 19, 2005. The five Annexes are: Offer List of MERCOSUR, Offer List of India, Rules of Origin, Safeguard Measures and Dispute Settlement Procedure.

 Under this PTA, India and MERCOSUR have agreed to give tariff concessions, ranging from 10% to 100% to the other side on 450 and 452 tariff lines respectively.

             The major product groups covered in the offer of MERCOSUR are food preparations, organic chemicals, pharmaceuticals, essential oils, plastics & articles thereof, rubber and rubber products, tools and implements, machinery items, electrical machinery and equipments. The major products covered in our offer list are meat and meat products, inorganic chemicals, organic chemicals, dyes & pigments, raw hides and skins, leather articles, wool, cotton yarn, glass and glassware, articles of iron and steel, machinery items, electrical machinery and equipments, optical, photographic & cinematographic apparatus. 

           The PTA would be operational after its ratification by the legislatures of the MERCOSUR countries which is under progress.

 (ii) Preferential Trade Agreement (PTA) with Chile

          A Framework Agreement to Promote Economic Cooperation between India and Chile was signed on January 20, 2005. The Framework Agreement envisaged a Preferential Trade Agreement (PTA) between the two countries as a first step. The Framework Agreement also provides for a Joint Study Group to go into the issues relating to a Free Trade Agreement between the two sides.

           As a follow up to the Framework Agreement, a PTA was finalized after four rounds of negotiations between the two sides. The last round of negotiations was held in New Delhi in November 2005. The PTA has two Annexes relating to the list of products on which the two sides have agreed to give fixed tariff preferences to each other and three Annexes relating to the Rules of Origin, Preferential Safeguard Measures and Dispute Settlement Procedures.

           While India has offered to provide fixed tariff preferences ranging from 10% to 50% on 178 tariff lines at the 8 digit level to Chile, the latter have offered us a similar range of tariff preferences on 296 tariff lines at the 8 digit level. The products covered in the mutual offers account for more than 90% of the value of total bilateral trade amounting to US$ 447.54 Million, which took place between the two countries during 2004-05. 

          The products on which India has offered tariff concessions relate to meat and fish products (84 tariff lines), rock salt (1 tariff line), iodine (1 tariff line), copper ore and concentrates (1 tariff line), chemicals (13 tariff lines), leather products (7 tariff lines), newsprint and paper (6 tariff lines), wood and plywood articles (42 tariff lines), some industrial products (12 tariff lines), shorn wool & noils of wool (3 tariff lines) and some others (7 tariff lines).

           Chile’s offer covers some agriculture products (7 tariff lines), chemicals and pharmaceuticals (53 tariff lines), dyes and resins (7 tariff lines), plastic, rubber and miscellaneous chemicals (14 tariff lines) leather products (12 tariff lines), textiles and clothing (106 tariff lines), footwear (10 tariff lines), some industrial products (82 tariff lines) and some other products (5 tariff lines).

           The Agreement has been signed on March 8, 2006.

Joint Study Group: The Framework Agreement between India and Chile, provided for a Joint Study Group (JSG) to identify the potential for cooperation between the two sides in trade in goods and services, investments and other areas of economic cooperation. The first meeting of the Joint Study Group was held in November 2005. The draft reports prepared by Chile and India were discussed during the meeting. Both sides agreed to submit their findings to their governments with a view to consider further action on the Free Trade Agreement 

(iii) Enhanced Interaction:  

Frequent interactions with important trading partners shall act as a catalyst for the private sector to explore and tap the export potential. The Government shall have increased frequency of interaction at the highest level with important trading partners

(iv) Institutional Mechanisms:

 (a)   Joint Commissions 

The following institutional arrangements already exist with countries of the Latin American region:

 (a) Indo-Argentine Joint Commission

(b) Indo-Argentine Joint Trade Committee

(c) Indo-Mexican Joint Commission

(d) Indo-Brazilian Commercial Council

(e) Indo-Cuban Joint Commission

(f)  Indo-Cuban Trade Revival Committee

(g) Indo-Suriname Joint Commission

(h) Indo-Guyana Joint Commission

                    In order to have increased frequency of interaction with important trading partners in the LAC region, the meetings of the Joint Commissions have to be held on a regular basis. Further, efforts would be made to set up consultative machineries with the other major countries in the region with a view to enhancing two-way trade.

(b) Joint Business Councils

           FICCI/ASSOCHAM have increased interaction with their counterparts and hold meetings of the Joint Business Councils (JBCs) at regular intervals. CII also has regular interaction with their counterparts in the LAC region with whom they have signed MOUs. Simultaneously, seminars & conferences are being organized within India for creating awareness on the emerging markets of Latin America.

 (c) Commercial Attaché

India has set up Missions in 13 major countries in the LAC region. However, there was no commercial post in any of these Missions, to exclusively look after the trade related matters.  Recently post of Marketing Assistant each in nine major Missions in the LAC region has been provided. Efforts are being made to further strengthen these Missions for commerce and trade.  

(d) Trade Analysis Centre

           A cell in the ITPO has been created to act as a centre for Trade Development with the Latin American region. The role of the cell in the ITPO is (a) to deal exclusively with export promotion and development matters pertaining to the LAC region, (b) Organising fairs/exhibitions as a tool of market development & (c) Organising Buyer-Seller Meets (BSMs).

           An office of the ITPO opened, in Sao Paulo in 2001, is acting as a central point for organising fairs/delegation visits to LAC. This office is also doing trade analysis in consultation with product specific EPCs. 

          CII and FICCI also have separate cells to look after trade promotion and development matters pertaining to the LAC region. The Latin America Committee in CII has been activated. The India-Latin America Interest Group in FICCI would also be activated. CII/FICCI would organise seminars at main centres in India/LAC on the potential of enhancing trade, followed by major product-specific buyer-seller meets (BSMs). 

(iii) Trade Missions:  

Trade/Economic Missions result in creating an awareness in the region regarding India’s economic reforms, strengths of the Indian industry and its export capabilities. They also provide an impetus for businessmen to explore new markets. High-level trade missions are being mounted to the LAC region under the programme. 

(iv) Exim Policy initiatives: Double Weight: 

For the purpose of recognition as Export House, Trading House, Star Trading House and Super Star Trading House, double weight is given on FOB or NFE basis to exports to Latin American countries, provided such exports are made in freely convertible foreign currency. 

(v) Trade Promotion Measures by ITPO: 

ITPO   undertakes various trade promotion measures including: 

·        Participation in specialized and commodity specific fairs & exhibitions in the countries of the LAC region. 

·        Special promotion and publicity in the Latin American countries. 

·        Promotion of Indian consumer products in Departmental Stores in LAC

·        Organizing Buyer Seller Meets. 

·        Promotion by Indian Missions by organising catalogue/brochure exhibitions. 

·        Awards to leading exporters to the Latin American region.

 (vi)    Market Development Assistance (MDA):

 The MDA guidelines have been revised from 1^st April 2006 and the following provisions have been made in respect of Focus LAC:

 (a)            Grant to Individual Exporters: Under the Focus:LAC programme, the cost of built up stalls along with international air fare in economy/excursion class, shall be reimbursable to the member-exporting companies of Export Promotion Councils (EPCs), if eligible under MDA Guidelines, with an upper ceiling of Rs. 1,80,000/-  per company per event for participating in Trade Fairs/Exhibitions in LAC led by EPCs, etc. . For EPCs, etc, led Trade Delegations/BSMs to LAC, only airfare by economy class upto a maximum of Rs. 1,00,000 shall be reimbursable. 

(b)      Participation in Fairs/Exhibitions in LAC region by EPCs:

 Councils will be given 60% of the rent of the Council’s central stall and other organising expenses for their participation in Fairs/Exhibitions in the LAC region, subject to a limit of Rs. 15 lakh per event. The airfare in economy/excursion class (excluding visa charges), DA as per MEA rates, Hotel Charges will be given on 100 % basis to one official of the Council for participation in the said events.  Entertainment charges will also be given @ US$ 500 for the Chairman of the Council and US$ 250 for V.C./E.D./Add.ED as per MDA Guidelines.

 However, if the event is conducted in more than one country during the same tour, additional expenses @ 60% of the rent and organizing expenses not exceeding Rs. 15 lakhs per country shall be allowed. 

(c)      BSMs/Trade Delegations to LAC sponsored by EPCs:

       Assistance will be given to the Councils as applicable for participation in Fairs/Exhibitions.

 (d)    Reverse Trade visits of prominent foreign buyers/delegates/journalists to India for participation in BSMs/Exhibitions etc.

 Return airfare of each delegate in economy class upto the entry point in India shall be reimbursable @ 100% subject to a ceiling of Rs. 1,00,000. 60% of the venue charges and other organizing expenses (excluding stay, DA, local travel, etc of the delegates) of the Reverse BSM will also be provided with a ceiling of Rs. 15 lakhs.

 (e)   Translation Facilities in foreign languages and vice versa:

 60% of the total cost will be reimbursable.

 (f)    Product Catalogues in CD Rom:

       60% of the total cost will be reimbursible.

 (vii) Information support:

 NCTI shall provide:

    -  information support in co-ordination with  UNCTAD Trade Points.

    -  Product Catalogues

    -  Trade Data    

 ECGC/EXIM BANK

 1.    ECGC Cover:

 Most of the Latin American countries are placed in the lower category for grant of ECGC cover. Because of lower grading, exporters have to pay higher premium for getting commercial cover.  The grading is to be reviewed periodically so that the economic situation of the countries gets reflected in the grading of ECGC.

2.    Lines of Credit:

Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries, to import goods and services from India on deferred credit terms. The Indian exporters can obtain payment of eligible value from Exim Bank, without recourse to them, against negotiation of shipping documents. LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool.

 The Exim Bank has currently extended nine lines of credit amounting to US $ 103 million to the following banks/Governments in the LAC region:-

i)                   Banco Bradesco SA, Brazil  ----  US$ 10 million

ii)                 Corporacion Andean de Fomento (CAF-Andean Development Coporation) for Bolivia, Colombia, Ecuador, Peru and Venezuela

                                                                                                  -- US$ 10 million

iii)               Banco Nacional De Comercio Exterior, S.N.C. (Bancomext), Mexico

                                                                                             -- US $ 10 million

iv)               Bancoldex, Colombia   --- US$ 10 million

v)               Central American Bank for Economic Integration (CABEI)

                           for Costa Rica, El Salvador, Guatemala,  Honduras

                         and Nicaragua. - - -  US $ 10 million

vi)              Republic Bank Limited, Trinidad & Tobago  --- US$ 8 million

vii)            Uniao De Brasileros S.A.( Unibanco), Brazil   --- US$ 10 million

viii)           Government of Suriname  --- US$ 16 million

         ix)             Government of Guyana    ---  US$ 19 million