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India is aiming for a WTO-compliant preferential trade agreement (PTA) with Mexico to help Indian exporters avoid the planned tariff hikes that will be implemented in the coming year.
The Commerce Ministry on Monday, December 15, said India is pursuing PTAs, which generally cover select products, unlike bilateral trade agreements (BTA) or free trade agreements (FTA) which would take more time.
Trade officials from both countries acknowledged during the discussions that the tariff hike was not primarily targeted at Indian supply chains, although it threatened to impact Indian exports worth about $2 billion.
Last week, Mexico approved a steep hike in most-favoured-nation (MFN) import duties, raising rates from 5% to 50% on 1,455 tariff lines, effective January 1, 2026. The step, taken within the WTO framework, applies to countries without a free trade agreement with Mexico and aims to boost local manufacturing and correct trade imbalances.
The sectors that will be hit the most by the tariffs include automobiles and auto components, textiles, iron and steel, plastics, leather and footwear, etc. This measure also aims to prevent the increase in imports from China.
First proposed in September 2025, the measure was initially estimated to impact Indian exports worth about $3.8 billion and was postponed to August 2026 after concerns were raised by non-FTA partners and industry. The proposal was resubmitted on December 3, 2025, received approval from both houses of Parliament on December 9 and 10, and is now awaiting notification in the Presidential Gazette.
According to DGCI&S data, India-Mexico merchandise trade in 2024 stood at $8.74 billion, of which Indian exports were $5.73 billion, imports were $3.01 billion and trade surplus was $2.72 billion. Major Indian exports include light vehicles ($0.88 billion), motorcycles ($0.39 billion), base metals ($0.76 billion), auto components ($0.74 billion), mechanical machinery ($0.46 billion), textiles and clothing ($0.41 billion), chemicals ($0.43 billion), and pharmaceuticals ($0.38 billion). Major imports from Mexico include crude petroleum oil ($1.7 billion), smartphones ($0.27 billion), and gold ($0.17 billion).
The commerce ministry said it has been continuously assessing Mexico’s tariff amendments since the issue came to light and is engaging with stakeholders to protect the interests of Indian exporters while engaging in “constructive dialogue” with Mexico to ensure a stable trade environment.
The Indian Embassy raised concerns with Mexico’s Economy Ministry on 30 September, which clarified that the measure was “not against India” and reaffirmed its commitment to bilateral relations. Following further talks on 2 December, both sides agreed to pursue a trade agreement to mitigate the impact, with technical discussions beginning on 12 December.