India and South Africa have set a December 2013 deadline to conclude the India-Southern African Customs Union (Sacu) Preferential Trade Agreement (PTA) to reduce tariffs and promote cross-border trade and investments between the two parties.

Indian government officials said that Indian Commerce Minister Anand Sharma and his South African counterpart Dr Rob Davies held talks to expedite the conclusion of the PTA between Sacu and India. This was reiterated by South African Deputy Minister for Trade and Industry Elizabeth Thabethe during her recent visit to New Delhi.

Sacu comprises South Africa, Botswana, Lesotho, Namibia and Swaziland.

Five rounds of negotiations have already been concluded since 2007, when the PTA between India and Sacu was first conceived. In recent years, boosting bilateral trade between India and Southern Africa assumed a strategic interest for India in view of its rising import dependency on fossil energy and minerals, an official said.

Currently, bilateral trade between the two regions was over- seen by a joint Ministerial commission; however, it was thought that a PTA, which was considered a stronger institutional framework, would significantly promote the strategic trade interests of India and the Sacu nations, the official added.

Further, a PTA would also indirectly facilitate greater Indian foreign direct investment (FDI) in the region, as lower tariffs and resultant improvements in margins of exports from Sacu to India would be key to India’s energy and mineral sourcing.

A lower tariff regime would improve the return on investments for Indian projects in the region, the official said.

A number of Indian government mining companies, such as NMDC, Coal India, MOIL (formerly Manganese Ore India) and Singareni Collieries Company, all had South Africa on their radar for mineral asset acquisition, while Tata Steel, Osho South Africa Coal Mining and JSW had already acquired assets in that country.

India-South Africa bilateral trade was currently pegged at $11-billion and forecast to rise to $15-billion over the next three years, while South Africa was the fourth-largest destination, with total Indian FDI of $15-billion.