India, South Africa-led SACU group may ink terms of reference for negotiating trade pact on Aug 12
India and the Southern African Customs Union (SACU) are set to sign the Terms of Reference for negotiating a Preferential Trade Agreement (PTA)
The Terms of Reference is a formal step expected to be followed by the launch of substantive negotiations on tariff concessions
South Africa is India's largest trading partner within the SACU bloc; bilateral trade between India and South Africa reportedly declined in the last fiscal year, while trade with other SACU members such as Botswana and Namibia has been growing
The development follows discussions between Indian and South African trade officials, including on the sidelines of a BRICS-linked ministerial engagement
Southern African Customs Union (SACU)
SACU is the world's oldest customs union, tracing its origins to an agreement of 1910 and reconstituted after decolonisation through the SACU Agreement of 1969 (revised in 2002). It comprises five member states that share a common external tariff and a revenue-sharing arrangement.
Key Details
- Members: South Africa, Botswana, Lesotho, Namibia, and Eswatini (formerly Swaziland)
- Headquartered in Windhoek, Namibia
- Members maintain a Common External Tariff (CET) on goods from non-member countries and pool customs, excise, and additional duties into a common revenue pool distributed among members
- SACU negotiates trade agreements with third parties as a bloc rather than through individual member states
Because SACU operates a common external tariff, any PTA India signs applies uniformly across all five member states — meaning the Terms of Reference under discussion would set the basis for tariff concessions covering the entire customs union, not South Africa alone.
Preferential Trade Agreement (PTA) vs FTA vs CEPA
A PTA is the most limited form of trade agreement — it grants tariff concessions on a specified, limited list of tariff lines rather than eliminating duties across the board. This distinguishes it from a Free Trade Agreement (FTA), which removes tariffs on substantially all trade, and a Comprehensive Economic Partnership/Cooperation Agreement (CEPA/CECA), which additionally covers services, investment, and other non-tariff areas.
Key Details
- India-MERCOSUR PTA: negotiations concluded in 2004, entered into force in June 2009; covers a limited list of about 450 tariff lines with graduated concessions (10%, 20%, or 100% duty reduction depending on the product)
- India-UAE CEPA (2022): a comprehensive agreement covering goods, services, investment, and government procurement — illustrates the deeper commitment level of a CEPA compared to a PTA
- India-SACU PTA negotiations originated around 2003 as part of India's Africa outreach but stalled for over a decade due to disagreements — India sought market access for textiles and clothing, which SACU treated as a sensitive sector, while SACU sought concessions on agricultural goods and minerals
The India-SACU track has been pursued as a PTA (not a full FTA or CEPA), signalling a more limited, product-specific scope of tariff concessions rather than comprehensive market opening — consistent with the sensitivities around textiles and agriculture that stalled talks previously.
India's Africa Trade Engagement and Diversification Strategy
India's economic engagement with Africa has historically been anchored in trade, development assistance (Lines of Credit), and forums such as the India-Africa Forum Summit. Trade agreement negotiations with regional blocs like SACU sit within this broader strategy of institutionalising ties beyond bilateral country-level engagement.
Key Details
- India-Africa trade has diversified beyond South Africa in recent years, with growth in trade with Botswana and Namibia noted alongside a dip in India-South Africa bilateral trade
- South Africa and India are both members of BRICS (expanded in 2024 to include Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE) and the G20, providing additional multilateral platforms for trade dialogue alongside bilateral/bloc-level PTA talks
The Terms of Reference signing reflects a renewed push, discussed alongside BRICS-related engagements, to revive a PTA negotiation that had been dormant for years, aiming to formalise preferential access across a customs union bloc rather than relying solely on the largest member economy.
- SACU founded: 1910 (reconstituted 1969, revised agreement 2002) — world's oldest customs union
- SACU members: South Africa, Botswana, Lesotho, Namibia, Eswatini
- SACU headquarters: Windhoek, Namibia
- India-MERCOSUR PTA: signed 2004, in force since June 2009, ~450 tariff lines
- India-UAE CEPA: signed February 2022, in force May 2022
- India-SACU PTA discussions initiated: around 2003; stalled over textiles (India's ask) vs agriculture/minerals (SACU's ask)