Why in News?
India and the Southern African Customs Union (SACU) signed the Terms of Reference (ToR) on 12 August 2026, initiating the negotiations on a Preferential Trade Agreement (PTA). The said agreement is expected to provide liberalization of market access, lower trade barriers and promote trade and investment between the Republic of India and the five SACU members.
About the Preferential Trade Agreement
- A Preferential Trade Agreement (PTA) is a trade arrangement under which countries provide preferential tariff treatment to certain goods traded between them.
- Unlike a Free Trade Agreement (FTA), a PTA does not necessarily remove tariffs on most or all goods. It generally provides lower or preferential duties on selected products.
- The proposed India–SACU PTA will provide a framework for discussions on tariff concessions, market access and other trade-related issues.
Key Areas Covered Under the ToR
The Terms of Reference cover eight chapters:
- Trade in Goods
- Market Access
- Customs Procedures
- Sanitary and Phytosanitary (SPS) Measures
- Trade Remedies
- Technical Barriers to Trade (TBT)
- Rules of Origin
- Dispute Settlement
Focus on Indian Export Sectors
- India is expected to seek better market access for products such as automobiles and auto parts, pharmaceuticals, machinery, electrical equipment, chemicals and textiles.
- Automobiles and auto parts are already an important part of India's exports to the SACU region. They were India's second-largest export category after petroleum products with exports worth around US$1.7 billion in FY 2025–26.
- The agreement could also create opportunities for Indian companies in healthcare, information technology, engineering and manufacturing.
India–SACU Trade Relations
- India and SACU have been discussing a possible trade agreement for more than two decades. The Union Cabinet had approved the start of trade negotiations with SACU in 2002.
- Five rounds of negotiations were held between 2002 and 2010, after which the process did not make much progress. The signing of the ToR in 2026 provides a fresh framework for restarting the negotiations.
Significance for India
- Provide greater market access for Indian exporters.
- Boost exports of pharmaceuticals, automobiles, machinery, textiles and engineering goods.
- Help India diversify its export markets.
- Strengthen India's economic engagement with Africa.
- Create opportunities for Indian companies in healthcare, IT and manufacturing.
- Support greater integration with regional supply chains.
- Strengthen India's position as an important trading partner for African countries.
