India, Mexico begin trade deal talks as tariff hikes threaten $2 billion loss in exports

India has initiated technical-level discussions with Mexico from December 12 to explore a preferential trade agreement, as proposed tariff hikes by Mexico threaten nearly $2 billion worth of Indian exports, Commerce Secretary Rajesh Agrawal said.

Calling a preferential trade pact the fastest route to securing relief, Agrawal said such an agreement could help India mitigate the impact of Mexico’s planned tariff measures. The tariffs, which Mexico has clarified are being applied on a most-favoured-nation (MFN) basis and are not aimed specifically at India, are expected to affect a wide range of Indian exports.

Sectors likely to be hit include automobiles, two-wheelers and auto components, textiles, iron and steel, plastics, leather, and footwear.

Mexican authorities have indicated that the broader objective of the tariff hike is to curb rising imports from China, rather than disrupt Indian supply chains.

India has raised concerns with Mexico, stressing that higher tariffs are not conducive to stable and growing trade ties, particularly at a time when bilateral economic engagement is expanding. India–Mexico bilateral trade currently stands at $8.7 billion, with engineering goods and manufactured products forming a significant share of India’s exports.

Officials said Mexico has conveyed that Indian exports are not the primary target of the measures, which form part of a wider trade policy response. However, New Delhi has made it clear that the potential fallout for Indian exporters remains a serious concern, especially for sectors with strong manufacturing linkages.

With the tariff hikes being imposed on an MFN basis, India has limited options under World Trade Organization rules. This has prompted New Delhi to pursue a bilateral approach, with ongoing technical discussions focused on identifying pathways to a preferential trade arrangement that could protect Indian exporters and ensure continued market access in Mexico.