MERCOSUR is a trading block in Latin America comprising Brazil, Argentina, Uruguay and Paraguay as its members. It was formed in 1991 with the objective of free movement of goods, services, capital and people and it became a Customs Union in 1995. It has become a successful market of 200 million people, 1 trillion dollars of GDP and 150 billion dollars of trade. It is the fourth largest integrated market after the European Union (EU), North American Free Trade Agreement (NAFTA) and ASEAN.

India had a total trade of US$ 1247.32 million with MERCOSUR during 2003-2004. Our exports to MERCOSUR were approx. US$ 385.45 million during 2003-2004 and our imports from MERCOSUR were approx. US$ 861.87 million in the same period. The region still has a huge potential for Indian exporters as our share is just 0.83% of the global imports of MERCOSUR. Our major items of exports to MERCOSUR are drugs, pharmaceuticals and fine chemicals, transport equipment, inorganic/organic/agro chemicals, cotton yarn & fabric, made-ups, readymade garments, cotton & manmade yarn fabrics, dyes, intermediates and coal tar. The major imports into India from MERCOSUR are edible (vegetable) oils, metalliferous ores, metal scrap and non-electrical machinery.

A Framework Agreement had been signed between India and MERCOSUR on 17 th June 2003 at Asuncion (Paraguay). The aim of this Framework Agreement was to create conditions and mechanisms for negotiations in the first stage, by granting reciprocal tariff reductions and in the second stage, to negotiate a free trade area between the two parties in conformity with the rules of the World Trade Organisation.