Chile was the first South American country to sign a trade agreement with India, in 1956. Seven decades later, the two are racing to conclude a much bigger deal. It is built around a resource India badly needs: lithium.
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1949: Diplomatic Relations Begin
India and Chile established diplomatic relations in 1949. It was one of India’s earliest ties with a South American country.
The two countries marked 60 years of ties in 2009 and the 70th anniversary in 2019. President Ram Nath Kovind visited Chile in 2019 for the occasion.
Do not mix this date with 1956. That later year is the first trade agreement, not the start of diplomacy.
Sources: Indian Embassy, Santiago; MEA brief.
1956: First Trade Agreement in South America
Chile became the first South American country to sign a trade agreement with India, in 1956. No formal India-South America trade framework existed before it.
A trade agreement is a written deal on how two countries trade. It can fix tariffs, quotas and rules. The 1956 deal was a simple start, not a modern free trade agreement.
The deal ran in three-year periods. It was renewed twice, and the last period ended in 1965.
Why it matters: it shows the relationship is old. The present CEPA builds on seven decades of ties.
Sources: Library of the Chilean Congress.
2006-2007: The PTA Signed and in Force
A Framework Agreement to Promote Economic Cooperation, signed on 20 January 2005, set the stage. The Preferential Trade Agreement (PTA) followed on 8 March 2006.
A PTA gives each side fixed tariff cuts on a specific list of goods. It is not full free trade.
- Signed: 8 March 2006.
- In force: September 2007.
The first list was small. India’s offer covered only 178 tariff lines, and Chile’s covered 296.
Sources: Asian Regional Integration Center; PIB, 2017; MEA brief.
2016-2026: From Expansion to a Full CEPA
India and Chile signed an agreement to expand the PTA on 6 September 2016. The pact widened coverage from about 474 to 2,829 tariff lines.
- Chile offered concessions on 1,798 tariff lines to India.
- India offered concessions on 1,031 lines to Chile.
- The expanded PTA covers around 96% of bilateral trade.
The two sides then agreed to go further. They signed terms of reference for a full Comprehensive Economic Partnership Agreement (CEPA). Both now target conclusion by the end of 2026.
Sources: MEA brief; PIB, 2017; PIB, CEPA terms of reference.
From PTA to CEPA: Why the Upgrade Matters
A PTA cuts tariffs only on a fixed list of goods. A CEPA is much broader. It covers goods, services and investment together, and is closer to a genuine free trade agreement.
Take an Indian software firm. A PTA does nothing for its services. A CEPA can open the market for it.
- Digital services and MSMEs.
- Investment promotion and cooperation.
- Critical minerals.
These are the new areas named in the terms of reference. The PTA never touched most of them.
Why now? Trade has grown a lot since 2007, and the old list no longer matches it. India also wants a safe supply of minerals. See the current affairs card below for the latest talks.
Sources: PIB, CEPA terms of reference; PIB, August 2026.
Chile Today: Geography and Trade
Chile is a long, narrow country on South America’s Pacific coast. It is squeezed between the Andes mountains and the ocean. The same Andean rocks hold some of the world’s largest copper and lithium deposits.
The trade picture is lopsided. Chile sold India about US$2.6 billion of goods in 2024. India sold Chile about US$1.2 billion. India therefore runs a deficit with Chile.
India’s exports to Chile are varied. They include motor vehicles, drug formulations, chemicals, iron and steel, textiles and auto components. Chile is India’s 5th largest trading partner in the Latin America and Caribbean region.
Indian data tell the same story. Imports from Chile in 2024-25 were US$2.6 billion, up 72% from the year before.
Sources: MEA brief; India Briefing.
The Lithium Triangle and India’s Critical Minerals Push
Chile, Argentina and Bolivia form the Lithium Triangle. Lithium is the key metal in rechargeable batteries for phones, electric vehicles and solar storage.
Resources and reserves are not the same. Resources are lithium that exists in the ground. Reserves are the part that can be mined at a profit today. Chile has the world’s largest reserves, about 9.2 million tonnes, out of 37 million worldwide.
Chile gets its lithium from salty underground water called brine, mainly in the Salar de Atacama. The water is left to evaporate in the sun.
India has no lithium production of its own and imports what it needs. This is a bottleneck for its battery and solar plans. Chile is also a giant in copper. It mined about 5.5 million tonnes in 2024, far above any other country.
Sources: USGS lithium 2026; USGS copper 2026; India Briefing.
KABIL’s Opening Move in Chile
Khanij Bidesh India Limited (KABIL) hunts for strategic mineral assets abroad on India’s behalf. It is a joint venture of NALCO, Hindustan Copper and MECL.
KABIL has signed a non-disclosure agreement with Chile’s state miner ENAMI to explore brine-type lithium blocks. It also sent an expression of interest in Chile’s request for information on lithium exploration and processing.
An NDA is a promise to keep shared information secret. It is a first step before any real deal. No mine is owned yet.
India and Chile also signed agreements on Geology and Mineral Resources. The Indian Mines Secretary led a mining delegation to Chile in April 2024.
Check your understanding
Choose an answer first. The short explanation appears after your choice.
1. India and Chile established diplomatic relations in 1956.
2. The 2016 expansion of the PTA widened it from about 474 to 2,829 tariff lines.
3. A CEPA covers only goods, like a PTA.
4. India imports more from Chile than it sells to Chile.
5. KABIL is a joint venture of NALCO, Hindustan Copper and MECL.
6. Chile supports India’s claim to a permanent UNSC seat.
Answered 0 of 6 · Correct 0
Beyond Tariffs: History and Strategy
Culture links the two countries too. Chilean poet Pablo Neruda, later a Nobel laureate, served as a young consul in Asia in the late 1920s. He attended an Indian National Congress conference in Calcutta as a visitor.
The two also agree in world forums. They share views on climate change, renewable energy and reform of the UN Security Council. Chile has backed India’s claim to a permanent UNSC seat since 2003.
Chile is a founding member of the Pacific Alliance, a trade bloc in which India is an observer. The expanded PTA could deepen India’s link with that bloc.
The CEPA is not only about cheaper goods. It is about a stable, long-term supply of minerals India cannot mine at home. A deeper minerals partnership could also reduce the trade deficit over time.
CEPA Negotiations Advance, August 2026
On 26 August 2026, Commerce Secretary Rajesh Agrawal met Chile’s Vice-Minister of International Economic Relations, Paula Estévez Weinstein, in Santiago. They met to advance the CEPA talks.
- Both sides target conclusion by the end of 2026.
- Sectors named: healthcare, pharmaceuticals, energy, minerals, agriculture and engineering.
- The deal aims at cooperation in technology, talent and resilient supply chains.
Both sides stressed their shared identity as members of the Global South.
Sources: PIB, August 2026.
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