The Comprehensive Economic Partnership Agreement (CEPA) between India and Chile is a topic of great relevance for the UPSC exam, particularly in the international relations and economy sections. The agreement aims to expand the trade basket between the two countries and include digital services.
Background of India-Chile relations
India and Chile have enjoyed a cordial relationship for several decades. Chile was the first country in South America to sign a trade agreement with India, way back in 1956. The two countries have signed several agreements in recent years to boost economic and strategic ties.
In 2006, a Preferential Trade Agreement (PTA) was signed between India and Chile, which was further expanded in 2017. In March 2020, the two countries signed an agreement to avoid double taxation. These agreements have helped to increase bilateral trade and investment between the two countries.
Significance of Chile for India
Geopolitical significance
Chile is strategically located in the Pacific Rim, making it an important player in the region’s geopolitics. It is a member of several multilateral organizations like the United Nations and the World Trade Organization. These organizations can be helpful for India in its diplomatic efforts.
Geo-economic significance
Chile is India’s fourth-largest trading partner in the Latin American and Caribbean region, with bilateral trade worth over $3.5 billion in 2020. Chile is rich in natural resources, including copper and lithium, which India can import to meet its industrial needs.
Chile is also interested in collaborating with India in the agriculture and allied sectors, particularly in the areas of fruits, vegetables, and wines. Chile has free trade agreements with 64 economies in the world and is looking to primarily target service sector companies from Chile or India.
Chile is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement between 11 countries. This membership can help India expand its economic ties in the region.
Security significance
Chile has a stable political system and a relatively low level of crime, making it a safe destination for Indian businesses and tourists. It has a strong military and has been actively involved in peacekeeping operations around the world, which can contribute to regional stability.
Chile is also an important partner in India’s efforts to counter terrorism and promote cybersecurity.
CEPA between India and Chile
The CEPA aims to further strengthen the economic ties between India and Chile. The two countries are looking to expand their trade basket and include digital services. The agreement will help to increase bilateral trade and investment between the two countries.
Chile is keen on collaborating with India in the areas of information technology, e-commerce, and other digital services. India has a strong IT sector, and Chile can benefit from India’s expertise in this area.
Why In News
Chile is exploring avenues to enhance its economic partnership with India by expanding its trade basket and including digital services in the Comprehensive Economic Partnership Agreement (CEPA) between the two nations. This move is expected to promote bilateral trade and investment, opening up opportunities for collaboration in the technology and digital service sectors.
MCQs about India-Chile Economic Partnership
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What is the significance of Chile for India?
A. Chile is a member of the European Union
B. Chile is India’s largest trading partner in the Latin American and Caribbean region
C. Chile is rich in oil resources
D. Chile is not interested in collaborating with India in any sector
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In which year was the Preferential Trade Agreement (PTA) signed between India and Chile?
A. 1956
B. 2006
C. 2017
D. 2020
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Which sector is Chile primarily targeting in its trade agreement with India?
A. Mining
B. Agriculture and allied sectors
C. Textiles
D. Automobiles
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