Evolution of the India-Chile Comprehensive Economic Partnership Agreement: UPSC Current Affairs Story Arc

Overview

This arc tracks the rapid evolution of the India-Chile economic relationship throughout 2025. Starting with a formal commitment (Terms of Reference) in May, the two nations quickly moved through three intensive rounds of negotiations to establish a Comprehensive Economic Partnership Agreement (CEPA). Unlike their existing limited trade arrangement, this new CEPA aims to integrate their economies across diverse sectors like MSMEs, investment promotion, and movement of professionals. For India, this represents a strategic 'pivot to Latin America,' securing supply chains for green energy materials while opening vast markets for Indian services and goods.

How This Story Evolved

Signing of Terms of Reference (May 8) → Conclusion of the 1st Round of negotiations (May 30) → Conclusion of the 3rd Round of negotiations (Oct 30)

1. 2025-05-08: India and Chile Sign Terms of Reference for CEPA
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   UPSC Angle: India and Chile sign Terms of Reference for CEPA.

   Key Facts:

   • India and Chile signed the Terms of Reference (ToR) for a Comprehensive Economic Partnership Agreement (CEPA) on May 8, 2025.
   • The CEPA will build upon the existing PTA between the two countries.
   • The CEPA seeks to include digital services, investment promotion, MSME, and critical minerals.
2. 2025-05-31: India-Chile CEPA Negotiation Concludes
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   UPSC Angle: India-Chile CEPA Negotiation Concludes (Round 1).

   Key Facts:

   • Terms of Reference signed: May 8, 2025.
   • 17 thematic tracks covered: trade in goods, services, movement of natural persons, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, customs procedures, investment promotion, MSMEs, and critical minerals.
   • 1st Round of India-Chile CEPA Negotiation Concluded on May 30, 2025.
   • Terms of Reference for negotiating the India-Chile CEPA were signed on May 8th, 2025.
3. 2025-11-08: India-Peru Trade Agreement and India-Chile CEPA Negotiations
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   UPSC Angle: India-Peru Trade Agreement negotiations concluded; India-Chile CEPA ongoing.

   Key Facts:

   • 9th Round of India–Peru Trade Agreement negotiations was held in Lima from November 3-5, 2025.
   • 3rd Round of India–Chile CEPA negotiations was held in Santiago, Chile from October 27-30, 2025.
   • Next round of negotiations between India and Peru will be held in New Delhi in January 2026.
4. 2026-02-15: India-Chile CEPA Negotiations Conclude in New Delhi
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   UPSC Angle: India-Chile CEPA negotiations conclude in New Delhi.

   Key Facts:

   • First round of India-Chile CEPA negotiations concluded in New Delhi.
   • Discussions covered trade, services, investment, economic cooperation, and strategic sectors.
   • Next round of negotiations expected to take place in July or August 2025.
   • The initiative follows the momentum generated during the State Visit of the President of Chile, H.E. Gabriel Boric Font, to India in April 2025, where both countries welcomed the launch of CEPA negotiations.

Genesis

Trigger

The signing of the Terms of Reference (ToR) for the India-Chile CEPA on May 8, 2025.

Why Now

The move was driven by a need to go 'beyond the existing PTA' (Preferential Trade Agreement) to include modern economic pillars like digital trade and critical mineral security, which are essential for India's 2047 development goals.

Historical Context

India and Chile previously operated under a limited-scope PTA. The upgrade to CEPA follows a global trend where India is aggressively pursuing bilateral deals (like those with UAE and Australia) after opting out of the RCEP in 2019.

Key Turning Points

1. [2025-05-08] Signing of the Terms of Reference (ToR) in New Delhi.

   It provided the formal mandate and framework, effectively launching the transition from a PTA to a CEPA.

   Before: Trade was limited to a specific list of goods. After: 17 thematic tracks were opened for comprehensive economic integration.

2. [2025-05-30] Conclusion of the 1st Round of negotiations.

   Defined the scope of the 17 tracks, including sensitive areas like 'movement of natural persons' (visas for professionals).

   Before: General intent. After: Detailed technical discussions on customs, investment, and digital services.

3. [2025-10-30] Conclusion of the 3rd Round in Santiago, Chile.

   Moved the negotiations to the partner country's soil, signaling high-level political commitment and progress on critical minerals.

   Before: Early-stage technical talks in India. After: Advanced bilateral dialogue reaching the South American continent.

Key Actors and Institutions

Key Institutions

• Ministry of Commerce and Industry (India)
• Ministry of Foreign Affairs (Chile)
• MSMEs (Micro, Small and Medium Enterprises)

Key Concepts

Comprehensive Economic Partnership Agreement (CEPA)

A wide-ranging trade pact that covers trade in goods, services, investment, and often IPR and government procurement, offering deeper integration than a simple Free Trade Agreement (FTA).

Current Fact: The India-Chile CEPA negotiations covered 17 thematic tracks as of the 1st round conclusion on May 30, 2025.

Preferential Trade Agreement (PTA)

A limited trade pact where member countries reduce tariffs on a 'positive list' of specific products rather than across the board.

Current Fact: The 2025 CEPA seeks to 'broaden economic integration' beyond the existing PTA between India and Chile.

Critical Minerals

Minerals like lithium and copper that are essential for high-tech industries and green energy transitions (EV batteries).

Current Fact: Critical minerals were specifically included as a focus area in the Terms of Reference signed on May 8, 2025.

Rules of Origin

Criteria used to determine the national source of a product to ensure that only goods from the partner country benefit from the trade agreement's lower duties.

Current Fact: Rules of origin was one of the core thematic tracks discussed during the 1st and 3rd rounds of negotiations.

What Happens Next

Current Status

As of November 8, 2025, the 3rd Round of India–Chile CEPA negotiations has been successfully concluded in Santiago, Chile (Oct 27-30).

Likely Next

A 4th round of negotiations is expected in early 2026 to bridge gaps in specific thematic tracks like rules of origin and sanitary measures.

Wildcards

Fluctuations in global lithium prices or political shifts in Latin America's 'Lithium Triangle' could accelerate or stall the critical minerals chapter of the agreement.

Why UPSC Cares

Syllabus Topics

• Bilateral, regional and global groupings and agreements involving India
• Effects of liberalization on the economy
• Changes in industrial policy and their effects on industrial growth

Essay Angles

• The role of Latin America in India's quest for resource security
• Trade agreements as a tool for strategic diplomacy
• From PTA to CEPA: The evolution of India’s global economic footprint

Prelims Likely: Yes

Mains Likely: Yes

Trend Signal: rising

Exam Intelligence

Previous Year Question Connections

• Identify the country India signed a lithium exploration agreement with (Argentina). — Chile is part of the same 'Lithium Triangle'; this arc shows India expanding this mineral diplomacy through a formal CEPA.
• Which country did India recently sign a CEPA with? (UAE). — Establishes CEPA as a recurring high-yield Prelims topic for bilateral relations.

Prelims Angles

• The 17 thematic tracks of India-Chile CEPA include MSMEs and Critical Minerals.
• Distinction between PTA (existing) and CEPA (proposed) for Chile.
• Geographical location of negotiation rounds (New Delhi and Santiago).
• Simultaneous trade negotiations with other South American nations like Peru (9th round in Nov 2025).

Mains Preparation

Sample Question: Analyze the strategic significance of the proposed India-Chile Comprehensive Economic Partnership Agreement (CEPA) in the context of India's energy security and its economic outreach to Latin America.

Answer Structure: Intro: Context of the 2025 negotiations transitioning from PTA to CEPA → Body 1: Economic benefits (Services, MSMEs, Investment) → Body 2: Strategic Resource Security (Critical minerals like Lithium/Copper for the Green Transition) → Body 3: Challenges (Geographical distance, Logistics, Rules of Origin) → Critical Analysis: Comparing with RCEP/Other FTAs → Way Forward: Deepening ties with the Lithium Triangle.

Essay Topic: The New Frontiers of Indian Diplomacy: Securing Resources and Markets in the Global South.

Textbook Connections

Key Takeaway

The India-Chile CEPA marks a strategic shift from simple tariff reductions to a deep economic integration centered on 21st-century needs like critical mineral security and digital service exports.

All Events in This Story (4 items)

1. 2025-05-08 [International Relations] — India and Chile Sign Terms of Reference for CEPA
   On May 8, 2025, India and Chile signed the Terms of Reference (ToR) for a Comprehensive Economic Partnership Agreement (CEPA), aiming to broaden economic integration and cooperation beyond the existing PTA. The new CEPA will encompass sectors such as digital services, investment promotion, MSMEs, and critical minerals.
   More details

   UPSC Angle: India and Chile sign Terms of Reference for CEPA.

   Key Facts:

   • India and Chile signed the Terms of Reference (ToR) for a Comprehensive Economic Partnership Agreement (CEPA) on May 8, 2025.
   • The CEPA will build upon the existing PTA between the two countries.
   • The CEPA seeks to include digital services, investment promotion, MSME, and critical minerals.
2. 2025-05-31 [International Relations] — India-Chile CEPA Negotiation Concludes
   The 1st Round of India-Chile Comprehensive Economic Partnership Agreement (CEPA) Negotiation Concluded in New Delhi on May 30, 2025. The high-level dialogue between India and Chile, the Terms of Reference for negotiating the India-Chile Comprehensive Economic Partnership Agreement (CEPA) were signed on 8th May, 2025.
   More details

   UPSC Angle: India-Chile CEPA Negotiation Concludes (Round 1).

   Key Facts:

   • Terms of Reference signed: May 8, 2025.
   • 17 thematic tracks covered: trade in goods, services, movement of natural persons, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, customs procedures, investment promotion, MSMEs, and critical minerals.
   • 1st Round of India-Chile CEPA Negotiation Concluded on May 30, 2025.
   • Terms of Reference for negotiating the India-Chile CEPA were signed on May 8th, 2025.
3. 2025-11-08 [International Relations] — India-Peru Trade Agreement and India-Chile CEPA Negotiations
   India concluded the 9th Round of India–Peru Trade Agreement negotiations in Lima, Peru, from 3rd to 5th November 2025. Discussions covered trade in goods and services, rules of origin, and critical minerals. The 3rd Round of India–Chile Comprehensive Economic Partnership Agreement (CEPA) negotiations was held in Santiago, Chile, from 27th to 30th October 2025.
   More details

   UPSC Angle: India-Peru Trade Agreement negotiations concluded; India-Chile CEPA ongoing.

   Key Facts:

   • 9th Round of India–Peru Trade Agreement negotiations was held in Lima from November 3-5, 2025.
   • 3rd Round of India–Chile CEPA negotiations was held in Santiago, Chile from October 27-30, 2025.
   • Next round of negotiations between India and Peru will be held in New Delhi in January 2026.
4. 2026-02-15 [International Relations] — India-Chile CEPA Negotiations Conclude in New Delhi
   The first round of negotiations for the India-Chile Comprehensive Economic Partnership Agreement (CEPA) concluded in New Delhi, marking progress towards enhanced economic cooperation. Discussions covered trade, services, investment, economic cooperation, and strategic sectors. The CEPA aims to increase employment, strengthen bilateral trade, and promote sustained economic growth between the two countries.
   More details

   UPSC Angle: India-Chile CEPA negotiations conclude in New Delhi.

   Key Facts:

   • First round of India-Chile CEPA negotiations concluded in New Delhi.
   • Discussions covered trade, services, investment, economic cooperation, and strategic sectors.
   • Next round of negotiations expected to take place in July or August 2025.
   • The initiative follows the momentum generated during the State Visit of the President of Chile, H.E. Gabriel Boric Font, to India in April 2025, where both countries welcomed the launch of CEPA negotiations.