India and the five-member Southern African Customs Union (Sacu) signed terms of reference on Wednesday to launch negotiations for a preferential trade agreement, as New Delhi seeks tariff relief for exports including automobiles, pharmaceuticals and industrial machinery.

The move revives trade talks between India and Sacu, comprising South Africa, Botswana, Namibia, Lesotho and Eswatini, after five rounds of negotiations between 2002 and 2010 ended without a deal.

The pact could become India's first major trade agreement with an African regional bloc, giving Indian companies preferential access to a market of about 65 million people while helping Sacu members expand exports to the world's fastest-growing major economy.

The terms of reference set the scope, objectives and procedures for the negotiations. Unlike a comprehensive free trade agreement, a preferential trade pact typically cuts duties on an agreed list of products and is less likely to cover services, investment or intellectual property.

The talks come as South Africa considers raising duties on automobiles from India and China to 50% from 25%, threatening a key Indian export.

The terms will guide negotiators towards a "balanced, mutually beneficial and development-oriented agreement," Ndiitah Nghipondoka Robiati, executive director at Namibia's Ministry of International Relations and Trade, said after signing the agreement with Yashvir Singh, an additional secretary at India's trade ministry.

India's Trade Minister Piyush Goyal said he was confident Sacu countries and India would "benefit immensely" from a fair, equitable and balanced agreement that he hoped to finalise in the coming months.

India is expected to seek duty concessions for automobiles and auto parts, pharmaceuticals, machinery, electrical equipment, chemicals and textiles, trade officials and industry representatives said.

Automobiles and auto parts were India's second-largest export category to Sacu after petroleum products, with shipments worth $1.7-billion in the fiscal year ended March 2026.

India's exports to Sacu totalled $7.5-billion in 2025/26, while imports stood at $9.2-billion. South Africa accounted for most of the trade, with Indian exports of $7-billion and imports of $8.5-billion.

New Delhi is also seeking more reliable access to Sacu supplies of critical minerals, including platinum-group metals, manganese and copper, which are important for manufacturing, batteries and clean energy technologies.