India, Paraguay Can Strengthen Trade Ties: PM

(Source: Indian Express, National Page)

Topic: International Relations; GS3 – Economy: Bilateral Trade

Context

Prime Minister Narendra Modi held talks with Paraguay’s President Santiago Peña, highlighting mutual interest in expanding bilateral trade, particularly in sectors like pharmaceuticals, agriculture, technology, and renewable energy.

Background

India and Paraguay have shared warm diplomatic relations since 1961. Paraguay’s inclusion in MERCOSUR (a Latin American trade bloc) and India’s 2003 Preferential Trade Agreement with MERCOSUR lay the groundwork for deeper economic integration. President Peña’s visit marks the first stand-alone presidential visit from Paraguay to India, aimed at deepening political, economic, and strategic ties.

Enhancing Economic Engagement

• PM Modi called for increasing trade in key areas like clean tech, agriculture, and pharmaceuticals.

• India already has a Preferential Trade Agreement (PTA) with MERCOSUR, which includes Paraguay.

• Discussions explored upgrading this PTA into a full-fledged Free Trade Agreement (FTA).

India’s Outreach to Latin America

• Paraguay’s location makes it a strategic gateway into South American markets.

• India seeks deeper ties with MERCOSUR to diversify beyond traditional trade partners.

• Latin America is emerging as a valuable region for food security and energy cooperation.

Strategic and Developmental Cooperation

• Both countries expressed intent to collaborate in renewable energy and technology.

• Paraguay supports India’s greater presence in global south alliances like G20 and BRICS.

• Talks highlighted setting up institutional mechanisms to support business-to-business exchanges.

Cultural and Diplomatic Signals

• PM Modi termed Paraguay a “key strategic partner” and appreciated its support in multilateral forums.

• This is seen as India’s move to counterbalance China’s increasing Latin America outreach.

• First-ever resident embassy of India in Paraguay was established in 2022.

Way Forward

India must prioritize bilateral FTAs with Latin American nations and use PTA upgrades for deeper trade integration. Setting up dedicated Latin America desks in trade ministries and strengthening diplomatic presence will enhance access and cooperation.

Also Read: The Indian Express Editorial Analysis- 03 June 2025
Also Read: The Hindu Editorial Analysis- 03 June 2025

Practice Question: India’s engagement with Latin America is an underutilized strategic opportunity. Discuss the scope of India–Paraguay relations in advancing economic and geopolitical interests. (GS2 – 250 words – 15 marks)