India will push for stricter source country criteria while offering tariff concessions to Peru at the ongoing negotiations for its proposed free-trade agreement with the South American nation.
The source country norms, called rules of origin in trade parlance, will help reduce India’s rising trade deficit with the country, officials said. Rules of origin are the criteria needed to determine the source country of a product based on which they get tariff concessions or are subjected to duties.
The two sides are meeting in Lima this week for the fourth round of negotiations of the proposed trade pact.
“They don’t want very strict rules of origin but we will push for our demand,” said an official in the know of the details.
India’s exports to Peru in the April-December period of 2018-19 were $560 million while imports were $1.8 billion. The trade gap has quadrupled in Peru’s favour from $380 million in 2016-17 to $1.6 billion in FY18.
India’s main exports to Peru are towers of iron and steel, pipes for oil and gas industry, automobiles, pharmaceuticals, motorcycles and three-wheelers, iron and steel products, polyester and cotton yarns. Main Indian imports from Peru are copper, gold, phosphates of calcium, zinc and lead minerals, fish flour, synthetic cables, fresh grapes and cocoa beans.
While Peru has expressed interest in Indian Pharma companies setting up generic medicines production facilities there, India is keen to up its import of copper ore and concentrate to be able to smelt them here.
“We want Peru to become a gateway to South America,” the official said.
In the Latin American and Caribbean Nations (LAC) region, India already has preferential trade agreements with Chile and the Mercosur trade bloc. Mercosur consists of Argentina, Brazil, Paraguay and Uruguay. Venezuela, a Mercosur member, is not a party to the agreement. However, the pact with Peru is a comprehensive one comprising goods, services and investment.