India and Chile plan to expand the PTA and include services and investment
HE Mr. Juan Rolando Angulo Monsalve, Ambassador of Chile to India, talks about the trade relationship between India and Chile. While discussing the planned PTA expansion and focus areas of renewable energy and agriculture, the Ambassador assures that the two countries are constantly on the lookout for new areas of cooperation.
The India-Chile relationship is in a very good shape. We are celebrating 72 years of diplomatic relations this year. India and Chile have a huge framework of relationship, mutual understanding, cooperation, development of political affinities and we are constantly looking for new areas of cooperation.
When it comes to trade, Chile has the privilege of being the only Latin American country to have a bilateral PTA with India from the Latin American region. It was signed in 2006 and expanded in 2017. We have finished the second round of negotiations for the new expansion of the PTA and of course, we see this as a very good opportunity for both countries to increase trade and boost investments and joint ventures.
Expansion of Preferential Trade Agreement
The original India-Chile PTA was signed in 2006 and expanded in 2017. We expect to go from around 2,000 tariff lines in goods to around 5,000 tariff lines. The agreement has fostered our bilateral trade, which has averaged US$ 2.2 billion. Still we have minerals such as copper and molybdenum accounting for nearly a half of the total export to India. But we are seeing more and more of other products like fresh fruits, dried fruits, chemical goods (like cellulose), pork meat, poultry and kiwis.
As far as the PTA expansion is concerned, we are also working to include investments and services, which will be also very good for Indian companies and Chilean companies trying to enter into the services area. The current PTA covers only goods and it would be a good thing if we could also include investments and services as mentioned.
The two countries signed an agreement to avoid double taxation in March 2020 and we think that this instrument will facilitate increased flow of cross border investments and technology. Currently, this agreement is in the legislative stage in Chile and we are hoping to have it enforced very quickly. We have recently launched the Chile-India Business Council, which is co-presided by businessmen from both countries and the main purpose is to create confidence & knowledge, foster business and explore possibilities of joint ventures or mutual understanding in the entrepreneurial communities of both the countries.
We are also absolutely encouraging investment and physical presence in our country. Chile offers, among other things, stability, effective rule of law, highly friendly business and commercial ecosystem and access to new markets thanks to its extensive network of free trade agreements. It also offers robust and reliable infrastructures, digital connectivity and a highly developed and business-oriented banking sector.
Chile’s foreign investment regime secures equal treatment for foreign and national investments. There’s a free-flow of capital and profit and a business environment. The government and all instances of government are committed to boost investment. Movement of people is something to improve. Two years ago, Chile allowed the entry of Indian Nationals into the country only with a valid visa for the USA. So if you have a business and a valid visa to the US, you can go to Chile as a tourist for up to 90 days or do business there. There is no need to come to the consulate and ask for your visa.
In the more expanded framework, we are trying also to do the same in the Pacific Alliance, which is a group of four countries – Columbia, Peru, Mexico and Chile. The idea is to also facilitate movement between those four countries for Indian businessmen. We would like to bilaterally advance the E-Visa system with India to facilitate movement of people. But that requires the establishment of migratory information exchange mechanisms. We have proposed that to the Indian authorities.
Chile aspires for decarbonisation of the economy by 2050. That necessitates the use of surface energy options, which are clean and renewable. Fortunately, because of our geographical conditions, we have one of the most powerful solar radiations in the world and have very consistent onshore winds as well. Studies indicate that we could produce up to 1.8 Gigawatt renewable electricity in the next years. So energy is a key focus area of our cooperation with India. In the north of Chile, we have the Atacama Desert, which is very huge, dry and one of the best spots in the world for having solar energy plants.
There is a huge possibility of green hydrogen, which is also very important in India as a renewable and green fuel. Our country is projected be one the cheapest producers of green hydrogen. Studies indicate that it could cost as low as US$ 1.3 per kg in the horizon of 2030. A few months ago, we launched a national strategy on green hydrogen. There is no industry yet, but we are trying to produce all the regulatory systems, economical and financial conditions to facilitate investors from Chile or elsewhere to enter this market.
Just recently, we inaugurated the first Latin American thermosolar plant again in the Atacama Desert and it is combined with a center of photovoltaic electricity. So I think this sector will see a lot of interest from Indian investors.
In the field of agriculture, Chile is a world leader in exports in the southern hemisphere and we have a lot of complementarities with India. Our products arrive here off season so we are not in competition with each other. This is also good for customers in both countries.
Of course we are trying to include all this products in the expansion of the PTA. We have to also deal with non-tariff barriers and have created a working group in sanitary matters to accommodate all concerns related to sanitary issues, regulatory formalities, etc. This group is presided by regulatory authorities in both countries. Their members have already been nominated and we are working very closely with the Indian Ministry of Agriculture.
Furthermore, India and Chile are trying to update our existing agreements in agriculture and thinking of cooperation in science and technology for areas such as biotechnology, seed preparation, fight against drought, adaptation of farmers to climate change, etc.
One instance is cold chains. We know that a lot of crops in India are lost because of the lack of proper management related to cold chains. Chile could perhaps collaborate in that area, since we have some experience on that area. We are also trying to create more resilient policies adapted to new circumstances like Covid or new challenges that could happen in the future.
It is important to include technical institutions. We are working with the Indian Council of Agricultural Research, for instance, on the National Initiative on Climate Resilient Agriculture in India with Chilean counterparts. The MOU is in the final steps of negotiation and we see that as a very good opportunity for both countries.
Other areas of cooperation
We are in a permanent search of new areas of cooperation. One instance is our cooperation in mining and geology. Both countries have expressed an intention to co-operate in lithium extraction. Along with Argentina and Bolivia, we form what’s called the lithium triangle and we have a working group in this area. Before Covid, we received a visit of an Indian delegation in Chile. We are looking forward the re-establishment of normal travel conditions to take this forward.
Everything related to exports of pharmaceutical drugs and generics from India to Chile is of utmost importance for us. We have already signed an agreement between the State Trading Corporation of India and the local Chilean counterpart. Now we are working with regulatory bodies to sign the new agreement in order to facilitate cooperation in this area.
Another area is space astronomy and satellite cooperation. There’s a plan to install one Indian tracking satellite station in Patagonia in the southern part of Chile. Furthermore, we have cooperation in management of emergencies and natural disasters, as unfortunately, both countries share a history of this kind of phenomena. Also, we are a founding member of the Coalition for Disaster-Resilient Infrastructure, which is an Indian initiative and we are developing several lines of cooperation in this area.
In the defence area too, we have cooperation. The two countries organised courses for mountain warfare in the Andes and the Himalayas and we expect to have military personnel of both countries participating. This year we have bought a trawler from India. We are also exploring what we can do in science and technology cooperation. Both countries have very good and successful Start Up programs, and we are eager to cooperate in that area as well. Antarctica is another field of cooperation, and we would like to share with our Indian counters parts our scientific experience in the field. We want to deepen our economic relationship by taking advantage of India’s competitiveness in sectors like information technology services, health, biotechnology and are working on that on a continuous basis.
HE Mr. Juan Rolando Angulo Monsalve is the present Ambassador of Chile to India. Views expressed are personal. usual disclaimers apply.