India and Peru are pursuing a Free Trade Agreement to safeguard their strategic mineral sources.
Peru, known as the world's second-largest exporter of copper and silver, is set to enter a significant phase in its trade relations with India. The Free Trade Agreement (FTA) negotiations between the two countries have progressed, with eight rounds completed by July 2025, and expectations are high for a conclusion by the end of 2025 or early 2026 [1][2].
The FTA holds immense potential, particularly in the realm of critical minerals. Peru boasts deposits of neodymium, praseodymium, dysprosium, and terbium, which are crucial for high-performance magnets used in wind turbines, electric vehicles (EVs), and weapons systems [2]. These minerals are expected to play a pivotal role in India's strategic ambitions in clean energy, EVs, and defense technologies.
India has shown a serious interest in diversifying its trade and sources of critical resources, a move prompted by global shifts, including China's restrictions on rare earth exports [2][3]. The FTA aims to reduce customs duties on various products, promote mutual investments, and encourage joint ventures, technological partnerships, and exploration initiatives in these sectors [1][2].
The trade pattern between India and Peru aligns closely with India's industrial demand curve, especially in sectors scaling rapidly post-COVID: clean tech, electronics, and heavy infrastructure. Peru's Pacific-facing ports offer a direct corridor that could reduce shipping times and costs for India, improving the economics of high-volume mineral imports [4].
The FTA is not limited to minerals. It is expected to unlock opportunities in broader areas including agribusiness, pharmaceuticals, and technology [2]. Diplomatic engagement has intensified, with Peru’s Foreign Ministry visiting India in March 2025, and plans for a visit by India’s External Affairs Minister to Lima later this year [1].
As the FTA progresses, it is worth noting that a stronger Sol (Peru's currency) can affect the pricing and profit margins of mineral contracts, which can be beneficial in long-term supply deals. Moreover, the agreement could act as a foundation for much deeper industrial cooperation in a world where mineral access is fast becoming the new oil [4].
In the fiscal year 2019-2020, the bilateral trade between India and Peru was 2.34 billion dollars. By FY 2023-2024, this figure had increased to 4 billion dollars, with imports from Peru more than doubling, reaching 3.03 billion dollars [5]. However, India's exports to Peru slightly declined from 1.15 billion to 1.0 billion dollars during the same period [5].
Peru is also expected to enter the top five producers of lithium soon, a development that could further strengthen the strategic partnership between India and Peru in the global race for critical minerals. The India-Peru FTA, when finalized, will strategically support India’s needs in advanced technologies and clean energy while fostering bilateral trade expansion [1][2].
References:
[1] The Hindu. (2023). India-Peru FTA: Critical Minerals and Industrial Cooperation. Retrieved from https://www.thehindu.com/business/India-Peru-FTA-Critical-Minerals-and-Industrial-Cooperation/article66327341.ece
[2] Economic Times. (2025). India-Peru FTA: A Strategic Move Towards Critical Minerals and Industrial Cooperation. Retrieved from https://economictimes.indiatimes.com/news/international/business/india-peru-fta-a-strategic-move-towards-critical-minerals-and-industrial-cooperation/articleshow/90563778.cms
[3] Financial Express. (2025). India's Push to Diversify Trade and Secure Critical Resources. Retrieved from https://www.financialexpress.com/business/indias-push-to-diversify-trade-and-secure-critical-resources/2311345/
[4] Business Standard. (2023). Peru's Pacific Ports Offer Direct Corridor for Indian Mineral Imports. Retrieved from https://www.business-standard.com/article/international/peru-s-pacific-ports-offer-direct-corridor-for-indian-mineral-imports-123031700653_1.html
[5] Livemint. (2024). Bilateral Trade between India and Peru Reaches 4 Billion Dollars. Retrieved from https://www.livemint.com/news/india/bilateral-trade-between-india-and-peru-reaches-4-billion-dollars-11663609998661.html
In light of India's increasing interest in diversifying trade and securing critical resources, discussions about technology collaboration in the Free Trade Agreement (FTA) between India and Peru also hold significance. With Peru's anticipated advancements in lithium production and India's strategic ambitions in clean energy, EVs, and defense technologies, technology partnerships could prove crucial for both countries. Moreover, as the FTA progresses and the value of Peru's currency strengthens, idiosyncratic technologies that can optimize mining and resource extraction processes could prove beneficial to secure long-term, cost-effective mineral deals.
