India and the five-member Southern African Customs Union (SACU) formally agreed on the Terms of Reference (ToR) on Wednesday, paving the way for negotiations on a Preferential Trade Agreement (PTA). Both sides intend to complete the negotiations within the next 12 months.

The proposed pact will initially address eight areas, including trade in goods, market access, customs procedures, sanitary and phytosanitary (SPS) measures, trade remedies, technical barriers to trade (TBT), rules of origin and dispute resolution. The two sides have also agreed that additional areas may be incorporated as negotiations progress, if required.

Commerce and Industry Minister Piyush Goyal said that India is targeting the completion of the negotiations within the coming months. He stressed the importance of maintaining momentum while ensuring that the process is not hurried at the expense of thorough discussions.

Goyal emphasised that achieving results would require the negotiations to move at a reasonable pace, while clarifying that this should not be interpreted as a call for rushing the process. He also said India would respect SACU members’ sensitive areas, while expecting similar consideration for issues that are sensitive for India.

According to the Commerce Ministry, India is likely to pursue lower or preferential duties for products such as automobiles and auto components, pharmaceuticals, machinery, electrical goods, chemicals and textiles. During the financial year ending March 2026, automobiles and auto parts accounted for India’s second-largest export category to SACU after petroleum products, generating exports of around $1.7 billion.

The latest development follows more than 20 years after the Union Cabinet first approved the launch of trade negotiations with SACU. The five-member bloc consists of South Africa, Namibia, Botswana, Eswatini and Lesotho.

Commerce Secretary Rajesh Agrawal said the agreement marks the first time India has signed Terms of Reference (ToR) for a trade pact with a regional grouping in Africa.

India is currently the second-largest supplier to the SACU market, while the proposed trade pact could expand opportunities for Indian companies in areas including healthcare, information technology and automobiles. Goyal noted that Indian firms in these sectors already have operations across the region and have contributed to employment generation locally.