India-Chile trade negotiations: A quiet and strategic deal beyond tariffs

As India and Chile inch toward upgrading their existing Preferential Trade Agreement (PTA) into a more comprehensive trade pact, the negotiations have unfolded quietly, far from the buzz that accompanies India’s deal with the European Union (EU) or the US. The trade negotiations for the Comprehensive Economic Partnership Agreement (CEPA) with Chile should not be viewed as a routine upgrade to a trade deal; this may be one of the most strategic trade negotiations underway.

The India-Chile trade relationship is not a new one. The two countries signed a PTA in 2006, which was expanded in 2016 to cover nearly 1,800 tariff lines. That arrangement reduced tariffs on select goods and widened market access but remained limited in scope. Further, to enhance economic integration and cooperation, in May 2025, both countries signed a framework agreement for CEPA, which would include several sectors, including digital services, investment promotion and cooperation, MSMEs, critical minerals, etc.

Though trade between the two nations has grown steadily, it has remained relatively small compared to other trading partners. Exports to Chile account for just 0.2-0.3% of India’s export basket, while Chile exports around 2-3% of its total exports to India by value. Chile’s exports are very concentrated, with China occupying around 40% of its exports. Chile’s export basket to India is dominated by copper and related minerals, alongside chemicals and some agricultural products. India, in turn, exports pharmaceuticals, automobiles, particularly two- and three-wheelers, textiles, and engineering goods. Though this relationship may not be trade-heavy, it is trade-compatible. And in the era of energy transition, that compatibility requires a dimension: improved market access with supply-chain resilience.


Chile holds some of the world’s largest lithium reserves and is a major global producer of copper. These are not ordinary commodities; they are critical inputs for industry and the global net-carbon neutrality goals. Lithium is central to electric vehicle (EV) batteries, grid storage systems, and renewable energy apparatus. Copper is also indispensable for power transmission, EV charging infrastructure, and the expansion of electricity grids. In a rapidly changing world, metal and mineral security has become synonymous with industrial security.

In this respect, India’s ambitions are clear. It aims to scale up EV adoption, expand solar and wind capacity, build domestic battery manufacturing under production-linked incentive (PLI) schemes, and reduce import dependence in critical sectors. However, secure, sustainable, and diversified access to critical minerals and metals, such as lithium and copper, is essential for realising these ambitions. At present, global mining, processing, and refining capacities for many critical minerals are highly concentrated, creating vulnerabilities in supply chains. For India, expanding partnerships with resource-rich countries like Chile is not only about lowering tariffs; it is also about building long-term supply chain resilience amid a fragmenting world order.

The India-Chile negotiations, therefore, should not be approached as a routine expansion of tariff concessions. They represent an opportunity to embed critical mineral cooperation within a broader trade and investment architecture. For Chile, too, trade diversification matters. While China remains a dominant destination for Chilean mineral exports, overdependence on a single market carries its own risks. India offers an expanding industrial base, growing domestic demand for energy transition technologies, and a large consumer market for goods. Beyond raw material trade, there is scope for collaboration in value addition, such as refining, battery assembly, and technology partnerships.

In terms of Digital products and services, Chile may learn from India’s experience of creating and operationalizing the digital public infrastructure. Unified Payment Interface has been a success in India for cashless transactions, while the use of Digilocker for paperless authentication has been growing. Further cooperation between the two may be explored in the Digital Currencies, as in India, the RBI has piloted the use of e-currency in both the retail and wholesale segments.

The future of such a partnership should move beyond a simple buyer-seller model. Instead of limiting engagement to mineral exports, India and Chile could explore joint ventures in mineral processing, long-term offtake agreements that ensure supply stability, and mechanisms for technology sharing in manufacturing. Investment protection provisions and facilitation of capital flows would also be vital to encourage Indian firms to participate directly in Chile’s mining and processing sectors.

Additionally, there is a larger geopolitical context. Much of the recent global discourse on critical minerals has been framed through strategic competition among major powers, like China and the US. India-Chile cooperation offers a different model, which is rooted in Global South collaboration rather than bloc politics. It demonstrates that strategic supply chains can be diversified through pragmatic economic partnerships, without being a part of geopolitical blocs.

Ultimately, the success of the India-Chile agreement will depend on how negotiators treat it. Though lowering or eliminating the tariff and non-tariff barriers for the merchandise trade may bring welfare effects for both countries, a strategic expansion rather than a conventional one would anchor a long-term industrial partnership.

If designed with foresight, integrating trade, minerals, investment, technology, and sustainability, it could present a model for sustainable economic partnership for the Global South also. The scope of the agreement, therefore, should not remain partial. It should become strategic.

Dr. Badri Narayanan Gopalakrishnan, PhD is the Founder of Infinite Sum Modelling. Himanshu Jaiswal is Research Fellow, Infisum Modeling.