India and Chile Set Stage for Comprehensive Economic Partnership Agreement (CEPA)

India and Chile signed the Terms of Reference (ToR) to initiate negotiations for a Comprehensive Economic Partnership Agreement (CEPA), aiming to deepen their economic relations across a broad range of sectors. The agreement builds upon their existing Preferential Trade Agreement (PTA) and marks a major step towards comprehensive bilateral trade cooperation.

Why in News?

India and Chile signed the Terms of Reference for CEPA negotiations on May 8, 2025. This announcement follows the Chilean President Gabriel Boric Font’s State visit to India in April 2025, where both nations expressed their commitment to a deeper economic partnership.

Key Features of the CEPA Initiative

• Builds on the existing Preferential Trade Agreement (PTA).
• Expands into new sectors: digital services, MSMEs, critical minerals, and investment cooperation.
• Aims to foster inclusive and sustainable economic growth.
• Negotiations will begin from May 26–30, 2025 in New Delhi.

Background of India-Chile Economic Relations:

• 2005: Framework Agreement on Economic Cooperation signed.
• 2006: Preferential Trade Agreement (PTA) signed.
• 2016: Expanded PTA signed and effective from May 2017.
• 2019–2021: Three rounds of PTA expansion negotiations.
• April 30, 2024: Joint Study Group (JSG) finalized report recommending CEPA.
• April 2025: Chilean President’s State Visit reaffirmed economic goals.

Objectives of the CEPA

• Expand trade beyond goods to services and investments.
• Promote MSME collaboration and employment generation.
• Ensure mutual economic benefits through a rules-based framework.
• Enhance access to critical and strategic resources.

Significance

• Deepens India’s engagement with Latin America.
• Opens up new trade corridors and investment flows.
• Reflects India’s strategy to diversify trade partners.
• Strengthens multilateralism and South-South cooperation.