India and Mexico Move Toward Trade Talks as Tariffs Reach 50% on 1,463 Goods
Key Facts
India and Mexico plan to sign terms of reference this week to launch formal negotiations on a preferential trade agreement, after the two sides completed work on the document. The Hindustan Times reported, citing officials, that the signing is expected "within the next two days." The move comes as Mexico imposes new tariffs of up to 50% on imports from countries with which it has no bilateral trade arrangements. The regime covers 1,463 goods, putting the proposed agreement on a direct path to address the cost of bringing Indian exports into the Mexican market. Indian Trade Secretary Rajesh Agrawal is due to visit Mexico as part of a week-long trade mission that also includes Brussels.
Cars topped India's merchandise exports to Mexico in fiscal year 2025-2026, worth $1.92 billion out of total exports of $5.73 billion, according to the Hindustan Times. Total merchandise trade between the countries was about $7.83 billion in the same fiscal year, with Indian imports from Mexico worth $2.1 billion. The figures indicate that cars are India's largest export item in the trade relationship, while Mexico's tariffs span multiple sectors. The affected goods list includes cars, textiles, clothing, plastics, steel, household appliances, aluminum, toys, furniture, footwear, leather, paper and cardboard, motorcycles, trailers and glass. Indian goods also expected to be covered by the agreement include chemicals, as well as cars, textiles, footwear, plastics, steel and toys.
An official said the proposed agreement would focus exclusively on preferential trade in goods. Experts say a preferential deal could address the tariff challenge more quickly than negotiations on a comprehensive free trade agreement. Such agreements typically cover a defined list of goods, with tariffs reduced without necessarily being eliminated. Mexico's measures took effect on January 1 under a decree linked to a plan launched in January 2025. The plan aims to increase local content in Mexican production chains by 15% by 2030, linking the tariffs to an industrial policy broader than trade ties with India.
Mexico remains a relatively small market for India's global exports, accounting for about 1% of Indian merchandise exports in fiscal year 2024-2025, according to ratings agency ICRA. The agency said cars and metal products were among India's leading export categories to Mexico, and that aluminum and nickel exports fall among the categories exempt from the higher tariffs. In separate calendar-year data, the Indian Embassy in Mexico City said bilateral trade reached $11.7 billion in 2024, compared with $10.57 billion in 2023. India's exports to Mexico totaled $8.9 billion in 2024, the embassy said. A Indian government report also showed that pharmaceutical exports to Mexico grew at a compound annual rate of 24.2% between 2015 and 2025, compared with 7.7% growth in Mexico's total demand for pharmaceutical imports.
Indian pharmaceutical exports to Mexico rose from $30 million in 2015 to $290 million in 2025, according to a report by the Indian government think tank NITI Aayog. India accounted for 2.8% of Mexico's pharmaceutical import demand in 2025, adding another sector to the backdrop for the trade negotiations. In the Indian economy, the preliminary HSBC composite output index rose to 56.7 points in October from 55.9 in September. The index recorded its fastest expansion in activity since June, but remained below its average during 2026. The reading provides an economic backdrop for the talks, while the next specified step in the agreement process remains the signing of the terms of reference in the coming days.