Kolkata :
India and Latin America are trading more than ever before, yet their economic relationship remains far shallower than the numbers suggest. In 2024–25, India’s total trade with Latin America and the Caribbean stood at $39.19 billion, with exports worth $15.17 billion and imports worth $24.02 billion. Trade remains concentrated in a relatively narrow range of commodities and products, while investment linkages, institutional engagement and participation in shared value chains remain limited relative to the scale of merchandise trade.
This raises a larger question: can India convert its expanding trade with Latin America into a broader and more strategic economic relationship? Doing so will require addressing a series of long-standing obstacles, including weak physical connectivity, limited trade agreements, high logistics costs, business and language barriers, and the absence of a sufficiently coherent economic strategy for engaging with the region. As India seeks to diversify its trade partnerships and strengthen its presence in emerging markets, Latin America represents a significant opportunity — but one that will require moving beyond rising trade volumes towards a more integrated economic relationship.
Rising Trade, but a Shallow Economic Relationship
India’s trade with Latin America has grown considerably over the past two decades, transforming the region into an increasingly important economic partner. Latin American countries have emerged as major suppliers of crude oil, minerals, edible oils and agricultural commodities to India, while Indian exports to the region include petroleum products, pharmaceuticals, automobiles, chemicals and engineering goods. Yet this trade remains concentrated in a relatively small number of countries and products. A 2019 study by the Inter-American Development Bank and the Export-Import Bank of India found that Venezuela, Mexico and Brazil accounted for around two-thirds of Latin America’s exports to India at the time, much of it comprising extractive products such as petroleum and copper. However, rising trade volumes can obscure the structural limitations of the relationship. Much of India’s engagement with Latin America continues to be driven by commodity complementarities rather than reflecting a more integrated pattern of economic engagement. India imports essential natural resources and agricultural commodities from the region while exporting manufactured goods and pharmaceutical products in return.
While this has created a strong foundation for trade, it has not yet developed into equally deep investment linkages, integrated supply chains or sustained industrial cooperation. The result is a paradox: India and Latin America are trading more than ever before, but the growth in trade has yet to translate into deeper economic integration. The scale of the potential identified by earlier research was significant. The 2019 IDB–Exim Bank study estimated an export frontier of about $68.8 billion for Latin America and the Caribbean in the Indian market and around $262.8 billion for India in the LAC market. These figures represented estimates of potential based on trade complementarities at the time, rather than forecasts of what current trade would necessarily reach. The challenge, therefore, is to move beyond a largely transactional and commodity-driven trade relationship towards deeper investment, industrial cooperation and value-chain integration.
The Connectivity Problem: Distance Beyond Geography
Geographic distance remains one of the largest barriers to closer economic relations between India and Latin America. The two regions are separated by vast distances, but the challenge extends beyond physical geography. High freight costs, long transit times and logistics constraints increase the cost and complexity of trade compared with geographically closer markets. The 2019 IDB–Exim Bank study identified transport and logistics inefficiencies, alongside tariffs and non-tariff barriers, as significant contributors to the cost of trade between the two regions. It estimated that, on average, trade costs could roughly double the price of a good moving between Latin America and India when all such barriers were taken into account. These logistical hurdles matter particularly for businesses operating on tight margins and for small and medium-sized enterprises attempting to enter distant markets. Long supply chains and limited connectivity can also constrain opportunities for time-sensitive exports and make sustained commercial engagement more difficult. As a result, the economic distance between India and Latin America is greater than geography alone would suggest. Addressing this challenge will require more than simply increasing trade volumes. It will require improvements in shipping connectivity, logistics partnerships, trade facilitation and institutional arrangements that can reduce the cost and complexity of doing business between the two regions.
Limited Trade Architecture and Policy Engagement
Another major limitation is the relatively modest trade architecture supporting India’s economic engagement with Latin America. While bilateral trade has expanded, India does not yet have an extensive network of comprehensive trade agreements across the region. Its preferential trade agreements with Mercosur and Chile provide an important foundation. The India–Chile PTA has been expanded over time, while the India–Mercosur arrangement remains a preferential rather than comprehensive free-trade agreement. These arrangements, however, cover only part of the region and do not fully reflect the scale or diversity of economic opportunities that have emerged. This matters because tariffs are only one part of the challenge. Deeper trade integration also requires cooperation on standards, customs procedures, investment rules, digital trade and trade in services. In the absence of stronger institutional frameworks, businesses often have to navigate unfamiliar regulations and market conditions independently, increasing the cost and complexity of entering new markets.
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The fragmented nature of Latin America presents an additional challenge. The region is not a single economic market, and significant differences in regulations, trade policies and political priorities mean that a one-size-fits-all approach is unlikely to succeed. India will therefore need to identify priority markets and develop differentiated economic strategies based on trade complementarities, investment opportunities and strategic importance. The larger issue is whether India’s trade architecture has kept pace with its growing commercial engagement with the region. Trade has expanded, but the institutional frameworks supporting it remain relatively limited. A more deliberate approach to trade agreements, regulatory cooperation and market-specific engagement will be essential if India is to convert commercial opportunities into sustained economic partnerships.
Beyond Trade: The Missing Investment and Value-Chain Strategy
India and Latin America possess significant economic complementarities. Latin America is a major supplier of energy, agricultural products and critical minerals, while India has growing capabilities in pharmaceuticals, automobiles, information technology, renewable energy and manufacturing. These complementarities could support a relationship that goes beyond India simply sourcing raw materials from Latin America and exporting finished products in return. Research on India’s economic engagement with Latin America has also emphasised the importance of complementing trade expansion with greater investment and deeper economic integration. The challenge is to translate existing complementarities into long-term commercial partnerships rather than allowing merchandise trade alone to define the relationship. Companies entering unfamiliar markets need better information, stronger institutional links and more predictable investment environments. Without such support, trade may continue to grow while investment and industrial cooperation remain comparatively limited.
The Economic Commission for Latin America and the Caribbean has also highlighted the importance of linking foreign direct investment to productive development, including opportunities associated with critical minerals, the energy transition and digital transformation. These are areas where stronger investment partnerships could help move India–Latin America relations beyond traditional patterns of commodity-based economic engagement. The larger opportunity for India, therefore, is to shift from a model centred primarily on buying and selling goods to one that also encourages investment, production partnerships and value-chain integration. In the long run, a deeper economic relationship with Latin America will depend not only on how much India trades with the region, but also on whether Indian and Latin American firms begin investing, producing and creating value together.
From Trade to Strategic Partnership
India’s growing trade with Latin America demonstrates the significant economic potential between the two regions. Yet rising trade volumes alone cannot create a deeper or more strategic partnership. The relationship will remain limited if it continues to be driven primarily by the exchange of commodities and finished goods. Addressing persistent gaps in connectivity, trade architecture and investment will therefore be critical to building stronger and more durable economic linkages. The potential is clear, but realising it will require a more focused economic approach that identifies priority markets and sectors while encouraging greater investment and value-chain integration. The question is no longer whether India and Latin America have the potential for deeper economic engagement, but whether India can build the policies, institutions and commercial partnerships needed to transform growing trade into a genuinely strategic economic relationship.
