For the agribusiness sector, this expanded PTA holds both promise and peril. India stands to benefit from crucial imports of agricultural goods, energy resources, and raw materials from the resource-rich MERCOSUR nations. In return, India aims to boost exports of high-value goods like pharmaceuticals, engineering products, and IT services. This diversification strategy is intended to reduce India’s reliance on established suppliers like China and Europe, enhancing market access for Indian products in Latin American economies.

However, a major hurdle for the dairy community and other soft commodity producers is the persistent issue of agricultural protectionism within the MERCOSUR bloc. Countries like Brazil and Argentina maintain strong protective barriers for their domestic farm sectors, which currently limit India’s access for sensitive goods such as pulses, sugar, and dairy products. Securing phased, mutually beneficial market access for these commodities will be essential but challenging, requiring delicate negotiation that respects MERCOSUR sensitivities.

Beyond farm protectionism, expanding the PTA faces other significant logistical and structural challenges. Economic asymmetry is a factor, as MERCOSUR economies are heavily focused on commodity exports, while India’s trade is more diversified across manufacturing and services, making reciprocal concessions difficult without exacerbating existing trade imbalances. Furthermore, the consensus required among all MERCOSUR member states (Argentina, Brazil, Paraguay, and Uruguay) slows decision-making compared to bilateral Free Trade Agreements (FTAs).