Answer & solution
Answer: (a) Both A and R are true, and R is the correct explanation of A
Correct Answer: Option 1 – Both A and R are true, and R is the correct explanation of A
Assertion (A) is TRUE: India and Chile signed the Terms of Reference ( ToR ) for a Comprehensive Economic Partnership Agreement (CEPA) in May 2025. This marked a significant upgrade from the existing India-Chile Preferential Trade Agreement (PTA, signed 2006, expanded 2017), which had limited coverage and underperformed trade expectations. A CEPA covers a far wider scope including services, investment, and digital trade.
Reason (R) is TRUE: The India-Chile Joint Study Group (JSG) completed its report in April 2024, recommending a comprehensive CEPA covering new sectors including digital services, critical minerals (where Chile has vast lithium/copper reserves India needs for energy transition), and MSME cooperation — providing the economic rationale for upgrading from PTA to CEPA.
R correctly explains A: The JSG's recommendation for a broader CEPA (Reason) directly led to and explains the signing of CEPA Terms of Reference (Assertion) — R is the correct explanation of A.