Whenever there is talk of India’s free trade agreements or bilateral trade agreements (FTAs or BTA), the headlines are often with the US, UK or the European Union. But away from the noise of these big agreements, India is very quietly preparing to implement a deal in South America, which is strategically more important than any deal with western countries. This agreement is between India and Chile.
According to economic experts, this is not just a business deal, but a big chessboard to secure India in the future ‘resource war’.
Let us understand the importance of this free trade agreement of India with Chile through simple questions and answers.
Question: Why is this agreement with Chile different and special from the deal of America or Europe?
answer: This agreement is more about the ‘fuel of the future’ than the ‘market’. In today’s world, ‘critical minerals’ like lithium, copper, cobalt and molybdenum hold the same status as crude oil once did. Chile is the stronghold of these minerals. It has the world’s largest reserves of lithium and copper. Since India wants to become a global hub in electric vehicles, renewable energy and electronics manufacturing, it is important for the country to have a hold on the supply chain of these minerals. This agreement will make India not only a commercial partner of Chile but also a ‘strategic partner’, so that our industry will not have to depend on others (China) for raw materials.
Question: How far have the negotiations reached and is this a completely new agreement?
answer: The talks are in ‘advanced stage’. Commerce Minister Piyush Goyal has recently confirmed that this agreement will be completed soon. Both countries are not starting from scratch; We have a preferential trade agreement since 2006. But, the Comprehensive Economic Partnership Agreement (CEPA) that is now being discussed has a much larger scope. This includes not just import-export of goods, but also digital services, investment and most importantly – opening up the critical minerals sector.
Question: Have Indian companies already started moving there on the basis of this deal?
answer: Absolutely, and this shows the seriousness of this deal. Along with diplomacy, corporate action has also started:
- Coal India: India’s state-owned Coal India has approved the formation of a 100% subsidiary company for lithium and copper projects in Chile.
- Adani Group: In November last year, Adani Group signed an agreement with Chile’s state miner ‘Codelco’ for copper projects. These steps show that both the Indian government and private sector players are considering Chile as a long-term partner.
Question: What do the trade figures of both the countries say? Do we really need Chile that much?
answer: The trade figures of both the countries clearly indicate that India needs Chile’s resources very much. India’s imports from Chile increased by 72% to $2.60 billion in the financial year 2024-25, while our exports there declined to $1.15 billion. This huge surge shows that Indian industries are in dire need of raw materials. With the free trade agreement, India will not only bring raw materials from Chile, but will also be able to reduce its trade deficit by increasing the export of its value-added services and goods there.
Question: Why is India’s agreement with Chile being called a ‘strategic advantage’?
answer: Because today supply chain has become a weapon. In view of the way the supply chain is being ‘weaponized’ in global politics, ‘strategic autonomy’ is very important for India. This agreement with Chile will provide India with a diversified and reliable supply base. When the rest of the world is scrambling for lithium, India will have a secure corridor. This is the ‘strategic advantage’ which is hidden from the ordinary eyes.
This agreement with Chile may not become a part of TV debates, but it can prove to be the backbone of India’s ‘Make in India’ and ‘Green Transition’. This deal will prove to be a far-reaching step towards transforming India from an importing country to a powerful manufacturing country.
