In a milestone diplomatic visit, Paraguay’s President Santiago Peña has arrived on his historic trip to India from June 2 to 4, 2025. It is the first such visit by a Paraguayan head of state to India since the normalization of India-Paraguay relations in 1961. This visit marks a milestone step towards a long-neglected relationship between two democracies, India and Paraguay in areas of trade, energy, technology, and culture.
President Peña’s visit to India is not just ceremonial. It is a sign of the increasing significance of Latin America in Indian foreign policy. Long preoccupied with neighbors and great powers, New Delhi is now rebalancing its international engagement, and Latin America with its strategic resources and democratic values is coming into play.
The importance of Peña’s visit is highlighted by his top-level meetings with President Droupadi Murmu, Prime Minister Narendra Modi, and External Affairs Minister S. Jaishankar. The agenda is ambitious going from trade and development cooperation to clean energy and digital transformation. This visit follows the momentum generated when India opened its embassy in Asunción in 2022, and Paraguay subsequently opened its own mission in New Delhi. These diplomatic missions have set up for a dynamic and formalized relationship.
Trade and Economic Potential
Economic cooperation is a pillar of India-Paraguay relations. Trade between the two nations amounted to almost USD 477 million in 2022-23 with India exporting pharma, cars, and agrochemicals and importing soya oil, aluminum, and iron and steel from Paraguay. The trade, however, is a far cry from realizing its full potential.
Since Paraguay is a member of the MERCOSUR trade bloc and India is already within a Preferential Trade Agreement with it, both want to widen the list of goods that could be traded. Reducing tariffs on a wider range of goods could bring major advantages to Indian exporters particularly small and medium-sized businesses while making Paraguay’s export base more diversified. In food processing, agricultural equipment, and clean technology sectors, the unexplored potential is high. Indian businesses can have fertile soil in Paraguay’s expanding economy, with Paraguay benefiting from cost-effective technological advancements of India.
Agriculture and Energy
Agriculture and energy offer two areas that are ready to be worked on in partnership. Paraguay, which is one of the biggest agricultural exporters (It is the world’s third-largest exporter of soybeans. Soybean exports in 2023 were worth about $3.26 billion) fueled nearly exclusively by clean hydroelectric power, eager to secure Indian agricultural machinery, irrigation technologies, and fertilizers. India in return hopes to benefit from Paraguay’s excess food production and clean energy know-how. In the energy sector, India’s solar power and green hydrogen ambitions make Paraguay a strategic ally. Clean power generated by the Itaipu and Yacyretá dams puts Paraguay at the forefront of clean energy, providing Indian companies with a hub for joint ventures and partnership projects in renewables.
Technology, Education, and Capacity Building:
Technology and education also constitute key elements of the emerging partnership. India’s soft power is seen in the setting up of a Center of Excellence in Information Technology (CEIT) in Paraguay. The project aims at developing digital capabilities and e-governance, paving the way for more substantial collaboration in cyber security and space technology. In addition, capacity-building schemes such as India’s ITEC (Indian Technical and Economic Cooperation) and diplomatic training are developing a community of Paraguayan professionals connected to India. These initiatives foster long-term partnership and establish relations.
Future?
Economic Ties
- India’s farm machinery, irrigation and biotech expertise will have firm demand in Paraguay.
- As Paraguay looks to cleaner transport, India’s affordable EVs may find new markets there.
- Enlarging the India-MERCOSUR Preferential Trade Agreement would release large tariff cuts, opening a wider commercial space for Indian SMEs.
Cooperation on Energy
- Paraguay’s excess hydropower and India’s international aspirations in green hydrogen and solar energy is a natural fit.
Increasing Tech and Digital Diplomacy
- Enhancement of India-funded Centers of Excellence in IT in Paraguay.
Diplomacy with the Global South
- Paraguay’s dogged standing by Taiwan has been an irritant to China.
- Paraguay can support India’s offers in international organizations such as the UNSC.
Conclusion:
President Peña’s visit to India is not only historic but also strategic. It is a symbol of India’s commitment to engage with Latin America and its expansion across the Global South. For Paraguay, it’s an opportunity to join hands with India on the growth curve, attract investments, and derive advantages from technology and education collaborations. At a time when geography is no longer a constraint but a hurdle to overcome. India and Paraguay are discovering common ground.
