President of Paraguay’s visit to India poised to boost India-MERCOSUR Trade and Investment ties: FIEO President

The Federation of Indian Export Organisations (FIEO) warmly welcomes the upcoming State Visit of Santiago Peña Palacios, President of the Republic of Paraguay, to India from June 2–4, 2025. The State Visit of President Santiago Peña is a milestone in India-Paraguay relations. It reaffirms our shared commitment to economic cooperation and opens the door to transformative opportunities for Indian exporters in the MERCOSUR region, said S C Ralhan, President, FIEO. This high-level engagement marks a pivotal step in deepening the economic partnership between India and Paraguay and enhancing India’s strategic outreach to the MERCOSUR bloc, added S C Ralhan.
 
Paraguay, a founding member of MERCOSUR, offers a unique gateway for Indian exporters aiming to access the South American market. Despite being landlocked, its central location, preferential access to regional giants such as Brazil, Argentina and Uruguay, and efficient connectivity through trade corridors and inland waterways make it an attractive hub for trade and distribution, added Ralhan.
 
Paraguay’s pro-business policies, low operational costs, and industrial incentives further position it as a strategic location for Indian companies to establish manufacturing and logistical bases to serve the broader MERCOSUR market.
 
FIEO Chief further reiterated that the Federation recognizes strong potential for bilateral trade and investment across several key sectors:
•    Pharmaceuticals: Leveraging India’s global leadership in affordable generics to meet healthcare needs.
•    Automobile Components & Two-Wheelers: Serving regional markets from Paraguay as an assembly and distribution hub.
•    Agri-Tech & Machinery: Supplying cost-effective and innovative solutions for Paraguay’s large agribusiness sector.
•    Textiles & Garments: Utilizing Paraguay’s special economic zones for duty-free access to MERCOSUR.
•    IT & Digital Services: Supporting Latin America’s digital transformation with scalable Indian solutions.
•    Renewable Energy: Partnering on solar-hydro hybrid energy models combining Indian technology with Paraguay’s abundant hydro resources.
 
Since its implementation in 2009, the India-MERCOSUR Preferential Trade Agreement (PTA) has modestly enhanced trade flows in pharmaceuticals, textiles, and machinery. However, with coverage limited to approximately 450 tariff lines and the exclusion of services, the agreement's scope remains narrow.
 
FIEO President strongly advocates for the upgradation of the current PTA to a comprehensive Free Trade Agreement (FTA). A broader agreement encompassing goods, services, and investments would significantly enhance market access, reduce trade barriers, and provide a major boost to India’s export diversification strategy.
 
As the Indian exporters face multiple challenges in the MERCOSUR market, including high tariff barriers, logistical inefficiencies, regulatory complexities, and cultural differences, Mr Ralhan urges both the governments to institutionalize and sustain trade relations, where FIEO can spearhead several initiatives:
•    Establishing the India-MERCOSUR Business Council to facilitate dialogue between government and industry.
•    Conducting regular trade missions and reverse buyer-seller meets aligned with major regional trade shows.
•    Developing digital matchmaking platforms tailored for MSMEs.
•    Collaborating with MERCOSUR trade bodies to promote sustained business linkages.
 
He further reiterated that FIEO works closely with the Indian Embassy in Buenos Aires (accredited to Paraguay) and Paraguayan trade agencies to promote B2B trade and investment linkages.
 
FIEO Chief expressed confidence that President Peña’s visit is expected to reinvigorate bilateral trade dialogue and facilitate new agreements to boost commerce and investment flows. It also offers a unique opportunity to showcase Indian capabilities, explore sector-specific partnerships, and build long-term institutional frameworks for cooperation. FIEO stands committed to supporting Indian businesses in tapping the growing opportunities in Paraguay and the wider MERCOSUR region through proactive trade facilitation, policy advocacy, and collaborative initiatives.