India eyes PTA with Mexico to shield exports from steep tariffs

India is aiming for a WTO-compatible Preferential Trade Agreement (PTA) with Mexico to help Indian exporters avoid planned tariff hikes that will come into effect in the coming year.

The commerce ministry said on Monday, December 15 that India is pursuing PTA, which typically covers select products, unlike Bilateral Trade Agreement (BTA) or a Free Trade Agreement (FTA) which would take more time. 

Trade officials from both countries acknowledged during discussions that the tariffs hikes was not primarily

targeted at Indian supply chains although it threatens to affect about $2 billion worth of Indian exports.

Last week, Mexico approved a steep hike in most-favoured-nation (MFN) import tariffs, raising rates from 5% to as high as 50% on 1,455 tariff lines, effective January 1, 2026. The move, taken within the WTO framework, applies to countries without a free trade agreement with Mexico and is aimed at boosting local manufacturing and correcting trade imbalances.

The sectors that would be most hurt by the tariff are automobiles and auto components, textiles, iron and steel, plastics, leather and footwear, among others. The measure is also intended to curb a surge in imports from China.

First proposed in September 2025, the measure was initially estimated to impact about $3.8 billion worth of Indian exports and was deferred to August 2026 following concerns raised by non-FTA partners and industry. The proposal was resubmitted on December 3, 2025, cleared both houses of Parliament on December 9 and 10, and now awaits notification in the Presidential Gazette.

India-Mexico merchandise trade stood at $8.74 billion in 2024, according to DGCI&S data, with Indian exports at $5.73 billion, imports at $3.01 billion, and a trade surplus of $2.72 billion. Key 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 comprise crude petroleum oils ($1.7 billion), smartphones ($0.27 billion), and gold ($0.17 billion).

The Commerce Ministry said it has been continuously assessing Mexico’s tariff revisions since the issue emerged and is engaging with stakeholders to safeguard Indian exporters’ interests, while pursuing a “constructive dialogue” with Mexico to ensure a stable trade environment.

The Indian Embassy raised concerns with Mexico’s Ministry of Economy on September 30, which clarified that the measure was “not directed against India” and reaffirmed its commitment to bilateral ties. Following further engagement on December 2, both sides agreed to pursue a trade agreement to mitigate the impact, with technical discussions commencing from December 12.