3 weeks ago
India, SACU Finalise Trade Terms as Pretoria Weighs Car Duty
India and a group of five countries in southern Africa want to make it easier to buy and sell things with each other.
The group is called SACU, and it includes South Africa, Botswana, Namibia, Lesotho and Eswatini.
The two sides have agreed on the first step of a special deal called a Preferential Trade Agreement.
This kind of deal lowers the taxes, or duties, on chosen items that the countries trade.
The paperwork for the first step was signed in New Delhi, India's capital, on August 12.
After that, they will start talking about the details within a month and try to finish within a year.
But there is a catch: South Africa is thinking about charging much higher taxes on cars coming from India and China.
Cars are one of the biggest things India sells to this region.
India also made a separate plan with Namibia to work together on medicines and special minerals like lithium and copper, which are used in batteries and electronics.
India and the South African Customs Union (SACU) finalised and signed the Terms of Reference for a Preferential Trade Agreement in New Delhi on August 12.
Negotiations are expected to begin within a month of the signing and conclude within a year, covering a goods-only 'positive list' of items.
The PTA would be India's first trade agreement with an African bloc; talks began nearly 20 years ago and were restarted after a 16-year gap.
South Africa is considering raising import duties on automobiles from India and China to 50% from 25%, a move that could hit India's biggest export to the region ($1.7 billion in 2025-26).
India exported goods worth $7.5 billion to SACU and imported $9.2 billion in 2025-26, while India and Namibia agreed to deepen cooperation in pharmaceuticals, critical minerals and services.
- Who
- India and the South African Customs Union (SACU), represented by Commerce and Industry Minister Piyush Goyal; Indian chief negotiator Yashvir Singh and SACU negotiator Ndiitah Nghipondoka-Robiati signed the document. South African Trade Minister Parks Tau met Goyal in Jaipur, and India and Namibia also agreed to deepen economic ties.
- What
- India and SACU finalised and signed the Terms of Reference for a Preferential Trade Agreement covering goods, which would be India's first trade agreement with an African bloc.
- Where
- New Delhi for the ToR signing and the India-Namibia Joint Trade Committee; Jaipur for the Goyal-Tau meeting on the sidelines of the BRICS Trade and Industry Ministers' Conference.
- When
- Signed on August 12 in New Delhi (originally planned for May at the postponed India-Africa Forum Summit); formal negotiations are to begin within a month and conclude within a year.
- Why
- To secure preferential market access for Indian exports such as automobiles, auto components and pharmaceuticals, and to ensure a stable supply of key industrial inputs including diamonds, platinum group metals, manganese, vanadium and copper.
Trade Liberalisation
Protectionism
Automobile Import Duties
Trade Liberalisation
India is seeking preferential market access for automobiles, auto components, pharmaceuticals and other goods in the SACU market through the PTA, with automobiles India's biggest single export to the region at $1.7 billion in 2025-26.
Protectionism
South Africa, India's biggest trade partner in the region, has proposed raising import duties on automobiles from India and China to 50% from 25%, a move that could affect Indian vehicle exports.
Key facts
- Trade Bloc
- South African Customs Union (South Africa, Botswana, Namibia, Lesotho, Eswatini)
- Terms of Reference Signing
- August 12, New Delhi; originally planned for May but postponed due to health situation and Ebola concerns
- India's Exports to SACU (2025-26)
- $7.5 billion (top items: petroleum products $2.1bn, automobiles $1.7bn, pharmaceuticals $763m)
- India's Imports from SACU (2025-26)
- $9.2 billion (top items: gold $3.0bn, coal and coke $2.8bn, precious and semi-precious stones $887m)
- Proposed Auto Import Duty
- 50% (up from 25%) on automobiles from India and China
- PTA Structure
- Goods-only agreement with eight chapters, including Trade in Goods, Rules of Origin, Customs Procedures and Dispute Settlement
- India-Namibia Bilateral Trade (2025-26)
- $592.94 million (exports $349.09m, imports $243.85m), up from $568.40m
- Key Indian Interests
- Duty concessions for autos, auto components, pharma, machinery and textiles; stable supply of diamonds, platinum group metals, manganese, vanadium and copper
Quotes
Commerce and Industry Minister Piyush Goyal
Indian government minister overseeing trade and industry.
“The signing of the ToR is happening after nearly 20 years since the discussions started.”
financialexpress.com
“After a gap of 16 years the talks were restarted and have reached the ToR stage.”
financialexpress.com
Sources
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