The much hyped trade between India and Mercosur countries (consisting of Latin American countries Brazil, Argentina, Paraguay and Uruguay) on the basis of Preferential Trade Agreement (PTA) will take place only by 2005, when the WTO regime sets in, said key CII officials looking after Indo-Latin American trade affairs. Contrary to the Commerce ministry announcement, the procedure for a Preferential Trade Agreement (PTA) and a subsequent Free Trade Agreement (FTA) would be concluded by August 2003. CII officials maintain that the Latin American economic scenario coupled with the market complexities will delay signing of the agreement.

"Mercosur is a very big market with major Latin American countries Brazil, Argentina, Paraguay and Uruguay as its partners. Considering its market potential, a lot of discussions and agreements have to be signed in before signing the PTA. It will take more than a year for any significant development on the front to take place," said Varunesh Tuli, project consultant with the CII on Latin American trade affairs. This should mean that a full-fledged trade on the basis of PTA between Indian and Latin American countries, with tariff and import duty concessions will be achieved only post 2005.

According to Tuli, pharma market size for the Mercusor region is worth $ 10 billion. This is because the weakening of the respective currencies of Argentina and Brazil by about 50 per cent. However, volume wise the market is growing and there is a lot of scope for future, he said.

Pharmaceuticals represent 2.57 per cent of Mercosur imports, while India supplied only $ 16 million worth of goods that amounted to 0.71 per cent of total pharmaceuticals import (2000). However, this saw a dramatic increase in the last two years, and India's exports in 2001-02 amounted to 47.05 million US$.

Mercosur, an integration of the economies of the four countries of Argentina, Brazil, Uruguay and Paraguay, set up in 1991, very similar in framework to that of North American Free Trade Agreement or NAFTA. The advantage with signing an agreement with Mercosur being, a single procedure would open the free trade gateways with four major Latin American markets. It counts Bolivia and Chile as associates. The four member countries hold a population of almost 200 million (Brazil 150; Argentina 33; Paraguay 4.5 and Uruguay 3.1); a total area of 11863 square kilometres; a GNP of over 700 billion US dollars and foreign trade adds up to 120 billion US dollars.

For India, this offers major trading possibilities since Mercosur is the third largest common market in the world, after the US and the European Union. For Mercosur, which has been keen to develop markets outside the US and the EU, its largest trading associates outside of Latin America, this also poses exciting opportunities. India, with its second highest growth rate among the developing nations and a population of over one billion can offer a market which is both large and possesses considerable buying power.

The pharmaceutical market size for the entire South American market is $ 30 billion. Brazil, Argentina, Columbia and Mexico are the major markets as far as bulk drugs are concerned, whereas Brazil, Columbia and Mexico are the key markets for formulations.

Realising that a PTA with Mercosur will be delayed, Union government is also trying an altogether separate route of signing individual PTAs with Chile and Uruguay.

The Commerce Ministry has already stepped up efforts in this regard. "Recently the government signed a MoU with Chile and made a significant announcement on Uruguay. From these moves it is becoming clear that the government is also following an alternative route," said Tuli.