India-Brazil Trade and Investment Overview

India and Brazil maintain a strong, multifaceted partnership, exemplified by their collaboration in key multilateral organizations, including BRICS, G-20, IBSA, and the United Nations. This strategic alliance, established in 2006, is rooted in shared democratic values and mutual commitment to inclusive economic growth.

India and Brazil also operate a Trade Monitoring Mechanism (TMM) to address trade challenges. In the most recent TMM meeting, held in October 2023, both countries explored ways to strengthen cooperation and reduce non-tariff barriers. Additionally, India and the MERCOSUR trade bloc (Brazil, Argentina, Uruguay, Paraguay) are working to expand their 2004 Preferential Trade Agreement (PTA) to further boost trade.

Historical and diplomatic background

The India-Brazil relationship dates to Portuguese imperial times, with both countries sharing influences from Portuguese culture. The connection between the two nations was further highlighted by the popularity of the Brazilian soap opera Caminho das Indias, which enhanced India’s image in Brazil. Formal diplomatic relations began in 1948, with India and Brazil each establishing consulates in Sao Paulo and Mumbai, respectively. Brazilian President Jair Bolsonaro’s 2020 visit to India, hosted by Prime Minister Narendra Modi, marked a high point in recent diplomatic exchanges, leading to the adoption of an Action Plan to Strengthen the Strategic Partnership. This plan includes agreements in diverse areas such as investments, cybersecurity, oil and gas, bioenergy, and healthcare.

Bilateral trade performance

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In July 2024, India recorded a trade surplus of US$197 million with Brazil, exporting US$575 million in goods while importing US$378 million. However, compared to July 2023, India’s exports to Brazil declined by 5.22 percent, and imports from Brazil dropped significantly by 38 percent.

India became Brazil’s fifth-largest trading partner in 2021, with bilateral trade rising to US$11.53 billion in 2021 and growing further to US$15.2 billion in 2022, a 32 percent increase from the previous year.

In 2022, India had exported US$9.78 billion in goods to Brazil, marking a 25.2 percent annual growth rate over five years. Brazil’s exports to India reached US$6.43 billion, growing at an annual rate of 5.68 percent since 2017.

India-Brazil trade relations: 2013 to 2023

Source: Consulate General of India, Sao Paulo

Major exports and imports

India’s main exports to Brazil include organic chemicals, diesel oil, pharmaceuticals and chemicals, engineering goods (including auto components, mechanical and electrical equipment), apparel and textile products, iron and steel (and products), plastics, ceramics, among others.

India’s imports from Brazil feature crude oil, soybean oil, gold, raw sugar, asbestos, copper ores, iron ores, manganese, kidney beans, cowpeas, valves, motor pumps, and more.

Investment dynamics

Although Brazil is not yet a major destination for Indian FDI, continued interest signals strong potential for future expansion, underscoring the prospects for deepening Brazil-India commercial ties.

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Indian investments in Brazil exceed US$6 billion, while Brazilian investments in India are around US$1 billion. Recently, India’s Sterlite Group secured an US$800 million power transmission project in Brazil, with plans to invest an additional US$2 billion. United Phosphorus Limited has established a new plant in São Paulo with a US$150 million investment, focusing on expanding the pulses segment, including chickpeas and lentils.

Prominent Indian companies in Brazil include Glenmark, Zydus Cadila, Sun Pharma, Dr. Reddy’s Laboratories, Pidilite Industries, ONGC Videsh Limited (OVL), NMDC Limited, TVS, Tata Motors, Infosys, and Wipro.

Notable Brazilian companies in India include Polo (automobiles), Vale (mining), Stefanini (IT), Gerdau (steel), WEG (heavy electrical motors and generators), Compsis (toll road software systems), Dedini (ethanol production), Farmas Kunz (footwear), Perto (ATM fabrication), and Fanem (hospital instrumentation).

Bilateral investment treaty

The India-Brazil Bilateral Investment Treaty (BIT), signed in January 2020, marks a departure from traditional investor-state arbitration by emphasizing state-to-state arbitration and dispute prevention rather than direct investor claims. Unlike most BITs, it prohibits tribunals from awarding compensation, only allowing them to interpret the treaty or recommend compliance measures, inspired by WTO practices. This shift aligns with a global trend to reevaluate investor-state arbitration, seen in reforms by entities like UNCITRAL and the EU, which increasingly prefer alternative dispute resolution methods, such as an Investment Court System.

India’s approach is distinct from Brazil’s; India’s model BIT allows investor-state arbitration but requires investors to exhaust domestic remedies first, whereas Brazil’s model prioritizes joint consultations and state-to-state arbitration. The India-Brazil BIT integrates both approaches, with dispute prevention mechanisms via a Joint Committee and arbitration solely between the states. The absence of direct investor claims could deter investors reliant on diplomatic channels, but advocates argue that both India and Brazil continue to attract substantial foreign investments without investor-state arbitration, reinforcing that alternative models may still appeal to global investors. The India-Brazil BIT exemplifies a growing experimentation with BITs worldwide, with countries either restricting or forgoing investor-state arbitration. This treaty’s effectiveness and global acceptance remain uncertain, but it adds a unique framework to the ongoing debate on international dispute resolution.

Indian companies in Brazil

• Sterlite Group
• United Phosphorus Limited
• Glenmark
• Zydus Cadila
• Sun Pharma
• Dr. Reddy’s Laboratories
• Pidilite Industries Limited
• ONGC Videsh Limited
• NMDC Limited
• TVS
• Tata Motors
• Infosys
• Wipro

Brazilian companies in India

• Polo (Automobiles)
• Vale (Mining)
• Stefanini (IT)
• Gerdau (Steel)
• WEG (Electrical Motors)
• Compsis (Toll Road Software)
• Dedini (Ethanol)
• Farmas Kunz (Footwear)
• Perto (ATM Fabrication)
• Fanem (Hospital Instrumentation)

Double Taxation Avoidance Agreement (DTAA)

The India-Brazil DTAA, first signed in 1988 and amended in 2013 and 2022, provides tax certainty by eliminating double taxation and adhering to international standards, including BEPS guidelines.

Key provisions

• Taxes covered: In India, the DTAA covers income tax and surcharges. In Brazil, it applies to federal income tax, excluding supplementary income tax.

• Withholding tax rates: 15 percent on dividends and interest, and 25 percent on trademark royalties.
• Capital gains: No withholding limit; gains from sales of ships and aircraft in international traffic are taxed solely in the residence country.
• Reciprocal tax sparing: Tax credits apply to cross-border payments.

The DTAA includes non-discrimination, exchange of information, and a mutual agreement procedure, all of which promote tax fairness and compliance.

Business outlook

As India and Brazil expand collaboration through multilateral forums, bilateral trade is expected to diversify beyond traditional sectors such as agriculture and energy. The DTAA and BIT enhance investor confidence by reducing the tax burden and providing robust investment protections.

With India’s investments in Brazil growing and reciprocal expansion into key industries, sectors such as technology, pharmaceuticals, and manufacturing are poised for growth. Moving forward, the partnership between India and Brazil is set to deepen, fostering new opportunities in areas such as digital transformation, bioenergy, and sustainable development.

With inputs from Melissa Cyrill.

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