India and the Southern African Customs Union have revived negotiations on a preferential trade agreement, opening a new phase in efforts to deepen commercial ties between India and the five member Southern African bloc.
Representatives from India and SACU signed the terms of reference for the negotiations on Wednesday, establishing the scope, objectives and procedures that will guide the discussions. SACU comprises Botswana, Eswatini, Lesotho, Namibia and South Africa. The development follows earlier negotiations that began in 2002 and went through five rounds before discussions stalled in 2010.
The renewed negotiations are significant for both sides, although the eventual economic impact will depend on the products covered, the depth of tariff concessions and the extent to which businesses in the five SACU economies can use the agreement to expand production and exports.
A preferential trade agreement is generally narrower than a comprehensive free trade agreement. It can reduce tariffs on selected goods without necessarily extending the same level of commitments to services, investment, intellectual property and other areas normally associated with broader trade agreements.
For India, the negotiations offer an opportunity to improve market access for industries including automobiles, automotive components, pharmaceuticals, machinery, electrical equipment, chemicals and textiles. Automobiles and automotive components were India’s second largest export category to SACU after petroleum products in the financial year ending March 2026, with exports valued at about US$1.7 billion.
The commercial relationship is already substantial. Indian exports to SACU reached approximately US$7.5 billion in the 2025 to 2026 financial year, while imports from the bloc were about US$9.2 billion. South Africa accounted for the overwhelming share of this trade, with Indian exports to South Africa estimated at US$7 billion and imports at US$8.5 billion.
For SACU, however, the negotiations are not simply about gaining access to Indian manufactured goods. The bloc’s economies have an interest in using improved market access to diversify exports, attract investment and strengthen productive capacity.
SACU’s trade policy framework requires its members to negotiate with external trading partners collectively. The bloc’s common customs structure means that trade agreements with external partners have implications for all five member states, even though their economies and industrial capacities differ considerably.
That collective framework is important because the five economies have different production structures and development priorities. South Africa has the largest industrial base in the bloc, while Botswana remains heavily associated with diamonds and is seeking greater economic diversification. Namibia is pursuing opportunities around minerals, logistics and green industries, while Lesotho and Eswatini have their own manufacturing and agricultural interests.
A successful agreement would therefore need to accommodate more than the interests of large exporters. Its significance for Southern Africa will ultimately be measured by whether it contributes to investment, industrial development, employment and greater participation by businesses across the region.
The mineral dimension is particularly important. India is seeking more reliable access to critical minerals from Southern Africa, including platinum group metals, manganese and copper. These resources are increasingly important to industrial production, battery supply chains and clean energy technologies.
For Southern African economies, the opportunity is to move beyond the traditional model in which mineral resources leave the continent with limited processing and manufacturing taking place locally. Greater access to India’s large and increasingly diversified economy could support investment in processing, manufacturing and regional supply chains if trade policy is accompanied by appropriate industrial and infrastructure strategies.
This question is particularly relevant to SACU’s broader economic agenda. The bloc has sought to use the African Continental Free Trade Area to advance industrialisation, develop regional value chains, promote exports and attract investment.
The negotiations also come at a sensitive moment for India’s automotive exports to Southern Africa. South Africa is considering increasing duties on automobile imports from India and China from 25 per cent to 50 per cent, a move that could affect one of India’s most important export sectors in the region. The development illustrates the competing policy pressures that negotiators will have to reconcile as they seek greater market access while protecting domestic industrial objectives.
For SACU governments, tariff liberalisation also carries implications for public revenue and domestic industries. Customs duties form part of the SACU Common Revenue Pool, from which revenue is distributed among the member states under the bloc’s revenue sharing framework. Any significant reduction in external tariffs therefore has consequences that extend beyond individual importers and exporters.
This makes the negotiations more consequential than a straightforward exchange of tariff concessions. The agreement will need to balance consumer access to competitively priced goods with the interests of Southern African producers, industrial development objectives, fiscal considerations and the bloc’s longer term ambition to build more resilient regional value chains.
The scale of the potential market is also worth placing in context. SACU’s population has grown steadily in recent years, with the bloc representing a combined market of more than 65 million people. Its customs union framework also facilitates the movement of goods within a common customs area.
At the same time, the agreement should not be viewed solely through the lens of market size. Southern Africa’s commercial relationship with India includes longstanding business, diplomatic and people to people connections, while India has increasingly looked towards African markets as part of its wider international trade strategy.
India already has a trade agreement with Mauritius through the Comprehensive Economic Cooperation and Partnership Agreement, which entered into force in 2021. A successful SACU agreement would represent a different development in India’s engagement with Africa because it would involve a customs union negotiating collectively rather than a single African state.
The renewed talks also come as SACU seeks to deepen its position within the wider African trade architecture. The bloc is simultaneously engaged in discussions involving the Tripartite Free Trade Area and other external trading relationships, while its member states are participating in the implementation of the African Continental Free Trade Area.
The India negotiations therefore have implications beyond the immediate value of bilateral trade. They could provide Southern African producers with another major market while giving Indian companies a more predictable framework for accessing the region. The extent to which those opportunities translate into broad based economic gains will depend on the final tariff schedules, rules of origin, standards, logistics and investment flows.
For Southern Africa, the central question will be whether increased trade produces greater local value addition rather than simply increasing the movement of finished products in either direction. For India, the challenge will be to secure improved access while accommodating the industrial priorities of five countries with distinct economic structures.
The terms of reference mark the beginning of that process rather than its conclusion. Negotiators now face the more difficult task of determining what products receive preferential treatment, how quickly tariffs should be reduced and how the eventual agreement can support trade while preserving the policy space needed for industrial development.
The talks are expected to proceed with the stated objective of producing an agreement that is balanced, mutually beneficial and development oriented. Whether that ambition is reflected in the final arrangement will depend on the substance of the negotiations in the months ahead.
