India and Southern African Customs Union Resume Trade Pact Negotiations

India and the Southern African Customs Union (Sacu) signed terms of reference on Wednesday to restart negotiations for a preferential trade agreement. The bloc includes South Africa, Botswana, Namibia, Lesotho, and Eswatini. This move revives discussions that previously took place between 2002 and 2010 but failed to produce a deal after five rounds of talks.

The agreement aims to establish a balanced and mutually beneficial framework. India is seeking lower tariffs on exports such as pharmaceuticals, industrial machinery, chemicals, textiles, and vehicles. The pursuit of lower duties on vehicles is particularly urgent as South Africa considers raising duties on Indian and Chinese cars from 25 percent to 50 percent. Additionally, India is seeking more reliable access to critical minerals from the region, including copper, manganese, and platinum group metals, which are essential for clean energy and battery manufacturing.

Unlike a comprehensive free trade agreement, this preferential trade pact typically focuses on cutting duties for a specific list of products rather than covering intellectual property, investment, or services. The pact would provide Indian companies access to a market of approximately 65 million people and allow Sacu members to expand exports to India, which is the fastest growing major economy in the world. India's trade minister, Piyush Goyal, expressed confidence that the agreement would benefit all parties and hopes to finalize it in the coming months.