Peru has 22 trade agreements in force, within which are the main economies of the world: United States and China. Now, the country is about to sign a FTA with Indiathe most populous nation in the world with more than 1.4 billion inhabitants.
The thing is that, although today the Asian country is the second most important Peruvian trading partner on that continent and the fourth in the world, the signing of the agreement is still pending – which could be carried out between this and next year – to consolidate the commercial relationship that last year reached the record figure of US$5,797 million, according to data from the Ministry of Foreign Trade and Tourism (Mincetur).
It should be noted that on March 30, 2015, work began to prepare the Joint Feasibility Study of this FTA.
The president of the Central Reserve Bank (BCR), Julio Velarde, even recently spoke about this commercial relationship, highlighting the growth potential for Peruvian products in that territory.
“India is the second destination for traditional exports, third in total exports and will probably continue to grow in its importance within exports in the following years, as its economy becomes somewhat larger,” stated the head of the BCR.
POTENTIAL
India, the country with the seventh largest area in the world, is an economy with a lot of potential. The executive director of Foreign Trade Research and Development of the Lima Chamber of Commerce (CCL), Carlos Posada, highlighted that this is the fifth largest economy in the world and the fastest growing.
“An agreement of this type will allow us to reduce or eliminate tariffs and trade barriers, granting our products preferential access conditions that do not exist today,” he highlighted.
Today Peru mainly exports minerals, but there are sectors with great potential to gain a greater presence in the Asian country.
“Currently, 97% of our exports to India are concentrated in minerals, mainly gold and copper. An FTA would allow us to diversify this export basket, promoting non-traditional sectors with high potential,” said Posada.
For example, as seen in the graph, according to Mincetur, Peru sells products such as chocolate, sugar, palm oil, and fresh figs to the world, but it still does not do so to the Indian market. Therefore, an opportunity opens up for Peruvian exporters.
For the union representative, fresh fruits such as blueberries and grapes, as well as processed products, natural dyes such as cochineal and tara powder would also be among the main beneficiaries of this FTA.
“The Indian middle class is growing rapidly and shows a growing interest in healthy foods and differentiated products, which opens a clear window for Peruvian agro-exports. With preferential conditions, these sectors could replicate the success achieved in other markets with which we already have current trade agreements,” he commented.
On the import side, Carlos Posada highlighted that India is an important global supplier of industrial goods, pharmaceuticals and cars. Regarding the latter, he indicated that said country is one of the main global manufacturers of low-cost vehicles.
With the agreement, it would be expected that these goods would enter without tariffs, generating more competitive prices and expanding the offer for the Peruvian consumer, without affecting any national production.
For his part, Gabriel Arrieta Padilla, head of Economic Studies and Commercial Intelligence at the Global Economy and Business Research Center (CIEN-ADEX), highlighted that the challenge that now arises is that of trade promotion to make known what Peru produces and what its benefits are.
“88% of Peru’s exports to India are concentrated in raw gold, which implies that there is a long way to go. We should not limit ourselves to depending only on commodity shipments,” he added.
In that sense, he assured that the Peruvian market is becoming increasingly more attractive, with new infrastructure such as the port of Chancay, which allows it to attract more investors.
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