A Relationship Built on Market Logic, Not Architecture

India–Latin America trade in food commodities has grown into one of the world’s most consequential agricultural supply relationships — built almost entirely on market logic rather than diplomatic architecture. According to India’s Ministry of Commerce and Industry, total bilateral trade between India and Latin American and Caribbean (LAC) countries reached $39.21 billion in FY 2024–25, up from $35.73 billion the year before. Imports from the region rose sharply to $24.04 billion, driven heavily by food and agricultural commodities: edible oils, pulses, and grains that Indian domestic production cannot supply in sufficient volume to meet the needs of 1.4 billion people.

The scale of India’s edible oil dependency tells the most immediate story. According to the Solvent Extractors’ Association of India (SEA), India imported 16 million tonnes of edible oils in the 2024–25 marketing year, spending $18.3 billion — a 22 percent increase in value over the prior year. India is the world’s largest importer of edible oils, and meets over 60 percent of its vegetable oil demand through imports. It sources soybean oil primarily from Argentina and Brazil. In FY 2024–25, according to India’s DGCI&S data, soybean oil imports hit a record 5.47 million tonnes, with Argentina as the leading supplier and Brazil ranked second. Argentina was the top supplier of crude soybean oil to India, supplying the majority share, with Brazil second at $773.88 million.

Pulses tell a parallel story of structural dependency. India set a historic record in marketing year 2024–25 by importing 7.344 million metric tonnes of pulses — the highest volume in the country’s history, according to Ag Pulse Analytica. India’s domestic pulse output has fallen to 23.4 million tonnes against rising demand, and imports have grown at extraordinary pace: according to trade data, India’s pulse import value rose from $1.57 billion in 2020 to over $5.06 billion in 2024 — a 220 percent increase in four years. While Australia, Myanmar, and Canada dominate pulse supplies, Brazil and Argentina are emerging as structured sources: in April 2024, India signed its first long-term contracts with Brazil for black gram (urad) and with Argentina for pigeon peas (tur), the first such agreements with South American suppliers.

Sources: India Ministry of Commerce LAC Division; India Briefing, Strengthening India-Latin America Trade Ties, January 2026; SEA (Solvent Extractors’ Association of India), November 2024; DGCI&S FY 2024-25; Ag Pulse Analytica, India Record-Breaking Pulse Imports MY 2024/25; deepbeez.com trade flow data.

The Structural Gap That Policy Has Not Closed

India’s edible oil dependency is not a temporary import surge — it is a structural condition decades in the making. The Research and Information System for Developing Countries (RIS) notes that more than 57 percent of India’s edible oil consumption is imported, and oilseed production has grown at a modest CAGR of only 1.9 percent between 2011–12 and 2021–22. In 2025–26, according to the Indian Vegetable Oil Producers’ Association (IVPA), India’s domestic edible oil production is estimated at 9.6 million tonnes against a projected import requirement of 16.7 million tonnes — a gap of over 7 million tonnes that cannot be closed by domestic policy alone within any realistic timeframe.

The government has recognised the problem. In September 2024, India raised the basic import duty on crude palm oil, crude soybean oil, and crude sunflower oil by 20 percentage points — taking the total duty to 27.5 percent on crude oils and 35.75 percent on refined oils — to support domestic oilseed farmers whose prices had fallen below the government’s minimum support price. The duty hike did not resolve the structural problem: USDA’s FAS New Delhi noted that despite the September 2024 duty increase, soybean oil imports from Brazil and Argentina actually increased from October 2024 to February 2025 compared to the same period in prior years, as discounted South American supplies remained competitive even at the higher tariff rate. By early 2025, government sources were signalling a potential further duty increase, according to Business Standard reporting in February 2025, reflecting the same unresolved tension between farmer price support and consumer affordability.

The Union Budget 2025–26 allocated Rs 11,040 crore ($1.27 billion) for the National Mission on Edible Oils – Oil Palm (NMEO-OP) and Rs 10,103 crore for the National Mission on Edible Oils – Oilseeds (NMEO-Oilseeds), according to IBEF data. The long-term target is to increase domestic oilseed production from 39 million tonnes in FY23 to 69.7 million tonnes by FY31. Even if achieved, this would reduce but not eliminate the structural import gap. India’s edible oil demand is itself growing at 2–3 percent annually according to SEA projections, driven by population growth and rising prosperity. The import bill will remain large regardless of domestic programme outcomes, making the terms and architecture of import relationships a permanent strategic question rather than a transitional one.

Sources: RIS, From imports to Atmanirbharta, 2025; IVPA, Business Standard February 2026; Business Standard September 2024 (duty hike); USDA FAS New Delhi Oilseeds Annual IN2025-0021; Business Standard February 2025 (second duty hike signals); IBEF, Oilseeds Industry in India (Budget allocations).

The India–US Trade Deal: A New Variable for Latin American Suppliers

A development as recent as February 2026 has introduced a significant new variable into India’s edible oil import calculus — one with direct implications for India’s relationship with Latin American suppliers. On February 6, 2026, India and the United States announced an interim trade framework under which India agreed to reduce or eliminate tariffs on a range of US food and agricultural products, including soybean oil, as part of a broader deal that reduces US reciprocal tariffs on Indian goods from 50 percent to 18 percent. The White House fact sheet confirmed that India would receive a Tariff Rate Quota (TRQ) for US soybean oil under the interim framework, with the legal text of agricultural concessions slated for finalisation in mid-March 2026.

The immediate market reaction was sharp: soybean oil futures on the Chicago Mercantile Exchange rallied to their highest in over six months following the announcement, according to Fastmarkets. But the practical implications for Latin American suppliers are more measured. The TRQ for US soybean oil is expected to range between 200,000 and 300,000 metric tonnes annually, according to Financial Content reporting — a significant volume but a small fraction of India’s total soybean oil import of approximately 4.8 million tonnes of crude soybean oil in 2024–25, of which the bulk came from Argentina and Brazil. Trade sources told Fastmarkets that market experts doubt US soybean oil can compete on price with South American suppliers even at reduced tariffs, given higher freight costs and strong US domestic biofuel demand that limits export surplus.

For India, the trade deal’s significance is not that it will displace Latin American soybean oil at scale — it almost certainly will not in the near term. Its significance is that it introduces deliberate supply diversification as a formal policy objective: India is explicitly using its soybean oil import market as a geopolitical instrument, opening a quota channel to the US to manage the broader trade and diplomatic relationship. This logic — using commodity import flows as strategic tools — argues directly for applying the same strategic intentionality to the Latin American relationship. If India is willing to structure a TRQ for the US, the case for a comparable government-to-government procurement framework with Argentina and Brazil — India’s actual primary suppliers — becomes considerably stronger, not weaker.

Sources: White House Joint Statement, February 6, 2026; White House Fact Sheet, February 6-9, 2026; Business Standard, India-US Trade Deal, February 7-8, 2026; Fastmarkets, Indian Veg Oil Buyers Await Clarity on US Trade Deal, February 2026; Financial Content, Landmark India-US Trade Deal Slashes Soybean Oil Tariffs, February 2026.

The Trade Agreement Gap with Latin America

Despite the scale and commercial significance of the food trade relationship, India’s trade agreement architecture with Latin America remains thin. India and Mercosur — the Southern Common Market comprising Brazil, Argentina, Uruguay, and Paraguay — signed a Preferential Trade Agreement (PTA) that came into force in June 2009. The PTA covers approximately 450 tariff lines with limited duty concessions — a narrow instrument relative to the actual trade relationship, which runs to tens of billions of dollars annually. Discussions to expand the covered tariff lines to 1,500–2,000 have been under way for years without conclusion.

In October 2025, India and Brazil announced a joint declaration to expand the India–Mercosur PTA to include both tariff and non-tariff issues, with a stated bilateral trade target of $20 billion by 2030. This is a positive but preliminary step. Separately, India has conducted multiple rounds of trade agreement negotiations with Peru and has a PTA with Chile, bilateral trade with which grew from $1.54 billion in 2020 to $3.84 billion in 2024 according to Ministry of Commerce data. India has no comprehensive Free Trade Agreement with any Latin American country or bloc. China, by comparison, has comprehensive FTAs with Chile and Peru, and has deployed Chinese FDI of approximately $159 billion across Latin America against India’s $12–16 billion, according to data on India–Latin America relations. India’s trade with the LAC region has grown 25 times between 2000 and 2023 — but has done so despite the absence of structured trade architecture, not because of it.

The consequence is a food import relationship that is structurally large but institutionally fragile. India has no government-to-government food security dialogue mechanism with Brazil or Argentina. It has no strategic reserve or long-term offtake agreements that would give Indian buyers priority access in supply-constrained years. It has no direct shipping infrastructure reducing maritime logistics costs between Indian import terminals and Brazilian or Argentine export ports — a factor the Ministry of Commerce identifies as a binding constraint on trade growth. CII-EY research estimates India’s share of LAC’s total imports at approximately 2 percent — a figure that reflects both the potential of the relationship and the extent to which it has been underinvested relative to its strategic significance.

Sources: India Ministry of Commerce (India-Mercosur PTA, in force June 2009; India-Chile trade $3.84B 2024); India Briefing, India FTA Updates December 2025 (October 2025 India-Brazil joint declaration); Wikipedia, India-Latin America Relations (Chinese FDI $159B vs India $12-16B; 25x trade growth 2000-2023); CII-EY, India-LAC Furthering Economic Partnerships (2% import share).

The Global Trade Realignment and India’s Position

The US–China trade war that escalated through 2025 has restructured global agricultural trade flows in ways that affect India’s Latin American food relationships. As US tariffs on Chinese goods pushed Chinese buyers toward Latin American agricultural suppliers, South American soybean and agricultural exports became increasingly oriented toward Asia. According to CSIS analysis, Argentina’s total soybean exports grew over 21 percent from January through August 2025 relative to the same period in 2024, as Argentine exporters moved to capture unmet Chinese demand. Brazil’s soybean production reached 171.5 million tonnes in 2024–25 according to USDA data, with the country projected to remain the world’s dominant soybean exporter.

The FAO’s Food Outlook (late 2025) flags a contrasting pressure point: global vegetable oil consumption is forecast to outpace production in 2025–26, influenced by reduced soybean outputs from contracted planting areas in Argentina, India, Ukraine, and the United States. This supply tightening — coming as India’s own import requirements continue to grow — reinforces the case for supply security frameworks that lock in access to Latin American agricultural surpluses at predictable terms, rather than leaving India exposed to spot market volatility in a supply-constrained global environment.

For India, the combination of factors — structural domestic production deficits, a growing edible oil import bill approaching $20 billion annually, a record pulse import year, an India–US trade deal that explicitly uses soybean oil as a strategic instrument, and a global agricultural trade environment becoming more contested — creates both the urgency and the rationale for a structured India–Latin America food security framework. The window in which India can shape the terms of that relationship on favourable grounds is now open. It will not remain open indefinitely as other major importers, including China, deepen their upstream positions in Latin American agriculture.

Sources: CSIS, When a Trade War Becomes a Food Fight, October 2025 (Argentina soybean export growth 21%); USDA WASDE February 2026 (Brazil production 171.5 MMT); FAO Food Outlook, late 2025 (global vegetable oil consumption outpacing production).

What a Direct Framework Would Look Like

A direct India–Latin America food security framework would operate on three tracks. The first is trade agreement architecture. The October 2025 India–Brazil joint declaration provides the political mandate to expand the Mercosur PTA from 450 tariff lines to a substantive agreement covering the commodities that actually move between the two regions. This needs to be concluded as an agreement, not continued as a conversation. Alongside Mercosur, India should complete its CEPA negotiation with Chile and finalise the India–Peru trade agreement, which has proceeded through multiple rounds without conclusion. A completed India–Mercosur agreement would provide the institutional foundation for a food security relationship commensurate with the commercial scale of the trade.

The second track is supply chain infrastructure. The binding logistics constraint on India–Latin America food trade is not primarily tariff levels but maritime connectivity. India and Brazil lack a direct shipping service between Brazilian export ports — Santos and Paranagua — and India’s major import terminals at Kandla, Mundra, and JNPT. Cargo moves through third-country transshipment hubs, adding costs that limit the competitiveness of direct procurement. A bilateral shipping facilitation agreement, coupled with coordination on port infrastructure, would reduce landed costs and make direct procurement commercially superior to sourcing through global commodity trading intermediaries whose margins currently represent a transfer of value from both the Indian buyer and the Latin American producer.

The third track is investment. China’s estimated $159 billion in FDI across Latin America includes substantial equity in agricultural infrastructure: grain terminals, crushing facilities, and farm operations that secure upstream supply chain access at scale. India’s agricultural investment presence in Latin America is negligible by comparison. NABARD and India’s Exim Bank have the institutional mandate but have not developed structured programmes for Latin American agricultural supply chain investment. A targeted India–LAC Agricultural Investment Fund, structured through BRICS or bilaterally, would give India the kind of upstream presence that converts buyer scale into supply security — and that generates commercial returns for Indian institutional investors alongside strategic supply chain benefits.

Sources: India Briefing, India FTA Updates 2025 (October 2025 joint declaration; India-Chile bilateral trade); Ministry of Commerce (Mercosur PTA coverage, India-Peru negotiations); Wikipedia, India-Latin America Relations (Chinese FDI comparison).

The Case for Moving Now

The momentum in India–Latin America food trade is real, growing, and increasingly consequential. The Ministry of Commerce’s LAC Division reports that in the first nine months of FY 2025–26 (April–December), total trade already reached $17.98 billion, suggesting FY 2025–26 will surpass prior years. PM Modi’s bilateral visits to Argentina and Brazil in July 2025 generated political momentum that has not been fully converted into negotiating outcomes. LIDE, Brazil’s principal business leadership organisation, established its first office in India in 2024, signalling structured commercial intent.

The February 2026 India–US trade deal has, paradoxically, strengthened the case for accelerating the Latin American framework rather than weakening it. The deal demonstrates that India is willing to use its commodity import market as a strategic instrument — structuring tariff and quota arrangements in return for broader geopolitical and economic benefits. Argentina and Brazil, as India’s dominant soybean oil suppliers, have more leverage in this framing than the US, which will supply only a marginal quota volume at higher freight cost. Converting that supplier leverage into a structured framework — long-term offtake agreements, co-investment in processing and logistics, preferential access for Indian buyers in constrained supply years — would serve both sides: supply security for India, demand assurance and value-added investment for Latin American producers.

For a country that has demonstrated through the Digital Public Infrastructure export programme and the SAGAR maritime framework that it can build consequential strategic partnerships quickly when the political decision is made, the India–Latin America food security partnership is an achievable ambition. What it requires is the institutional commitment — made at the level of the Prime Minister, the Commerce Ministry, and the External Affairs Ministry — to treat the food trade relationship with Latin America as the strategic asset it already is, and to build the architecture that makes it durable.

Sources: India Briefing, Strengthening India-Latin America Trade Ties, January 2026 (FY 2025-26 YTD trade $17.98B; PM Modi July 2025 visits; LIDE India office 2024); White House fact sheet February 2026 (India-US soybean oil TRQ); Fastmarkets, Indian Veg Oil Buyers Await Clarity, February 2026.

The Hind covers policy, power, and strategic affairs from India’s perspective. Views expressed are analytical and editorial.