India proposes limited trade deal with Mexico to offset tariff hikes

The commerce ministry added that Indian exports worth around $2 billion to Mexico, particularly automobiles, two wheelers, auto parts, textiles, among others could be affected by the tariffs.

India has proposed pursuing a limited trade deal with Mexico to cushion the impact of higher tariffs planned by the Mexican government, the commerce ministry said on December 15.

“The quicker way is to get a Preferential Trade Agreement (PTA) because a free trade agreement will take longer. So, we have started discussions with Mexico on this,” Commerce Secretary Rajesh Agrawal said.

While a PTA offers reduced tariffs on selected products, an FTA eliminates or significantly lowers tariffs on most goods traded between two countries.

The Mexican Senate on December 11 approved a plan to raise import tariffs to up to 50 percent next year on more than 1,400 goods coming from India, China and other Asian economies in a bid to shield domestic manufacturers.

First proposed in September 2025 and deferred to August 2026 due to concerns raised by non-FTA partners, the proposal was resubmitted on December 3, 2025 and has been cleared by both house of Parliament in Mexico and a presidential gazette notification is expected this week.

Higher tariffs will apply to imports from countries that do not have trade agreements with Mexico, such as China, India, South Korea, Thailand and Indonesia.

The commerce ministry added that Indian exports worth around $2 billion to Mexico, particularly automobiles, two wheelers, auto parts, textiles, among others could be affected by the proposed tariffs.

The Indian embassy raised immediate concerns with Mexico's Ministry of Economy on September 30, which clarified that the measure is not directed against India.

Thereafter, a virtual meeting between Commerce Secretary Rajesh Agrawal and Vice Minister Luis Rosendo was held on December 2, during which they agreed to explore a trade agreement, with technical discussions beginning on December 12, the ministry said.

India’s total exports to Mexico in FY25 stood at $5.75 billion, led by engineering goods worth $3.53 billion, electronic goods $544.57 million, organic and inorganic chemicals $400.53 million, drugs and pharmaceuticals $320.19 million, ready-made garments $190.26 million, and plastics and linoleum $158.76 million, along with other major shipments such as spices, leather products, and gems and jewellery.

Moneycontrol had earlier reported that certain exporters have formally urged the Commerce Ministry to pursue a trade deal with Mexico, with some industry leaders even flagging the issue directly to Minister Piyush Goyal.