India Mexico Trade Deal Proposed to Offset Impact of Rising Tariffs

India has proposed a limited trade arrangement after Mexico’s sharp tariff increases on imports from countries that do not have preferential trade agreements. The move comes as Indian exporters face the risk of losing price competitiveness in a market.

On December 11, Mexico announced an increase in import duty to up to 50 per cent on more than 1,400 product categories, to take effect from early 2026. The decision has been positioned as a measure to protect the domestic industry and employment.

Which Indian Exports Are Likely to Be Affected?

Indian exports to Mexico are estimated at around $5–6 billion annually, according to trade data. Of this, nearly $2 billion worth of shipments, primarily from automobiles, auto components, engineering goods, steel products and textiles, could face higher duties under the revised tariff regime.

Other Countries Affected by the Tariff Hike

The revised tariff structure applies to imports from countries without preferential trade arrangements with Mexico. Apart from India, this includes China, South Korea, Thailand and Indonesia

Preferential Trade Agreement: How This Fits into India’s Trade Approach

To limit the fallout, India has proposed exploring a Preferential Trade Agreement (PTA) with Mexico. Unlike a full free trade agreement, a PTA focuses on tariff concessions for a selected set of products and can be negotiated over a shorter time frame.

Officials are reviewing product categories that could be covered under this approach. Till now, the discussions remain exploratory, and no formal timetable has been shared so far.

This prioritises targeted arrangements to protect export interests amid shifting global trade policies. Rather than pursuing comprehensive agreements that take years to conclude, the focus has been on quicker, product-led solutions.

What Happens Next?

The proposed arrangement could help limit the impact of the tariff increase on key export segments. The outcome will be closely monitored by exporters and trade bodies, as it may shape future engagement between India and Mexico.

Source: https://www.moneycontrol.com/

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