India-Mexico FTA Talks Begin as Tariff Hikes Loom

• India and Mexico are negotiating a Free Trade Agreement to address new tariffs imposed by Mexico on non-preferential imports, including from India
• Mexico’s proposed tariff hike, deferred to 2026, was resubmitted in December, prompting India to request special concessions
• With $5.75 billion in exports to Mexico, India seeks mutually beneficial solutions and aims to leverage the USMCA through a trade deal

Mexico has recently established high tariff rates on imports from non-preferring trade partners - including India. Tariff rates on imports from non-preferring countries, including India, will be up to 50%.

The establishment of high tariffs has compelled India to work with Mexico to explore opportunities to increase trade relations between the two countries. An official stated, “India is already engaged with Mexico for a trade agreement. The terms of reference could be finalised soon”.

The ongoing India-Mexico FTA negotiations are a key focus of India-Mexico trade talks, aiming to address tariff hikes and strengthen bilateral trade negotiations, while updating trade policy to boost India exports to Mexico.

Initial discussions between Indian and Mexican representatives have already commenced regarding a potential free trade agreement (FTA) between the two nations. The intent is to create a framework for further negotiation towards an FTA, and the Terms of Reference (ToR) for the potential agreement will be completed and shared within a few weeks.

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India’s exports to Mexico in FY 2025 totalled $5.75 billion, and imports from Mexico were $2.9 billion. Both countries' officials are working together to find solutions that are positive for both sides since Mexico recently implemented increased tariffs on its own initiative.

Mexico initially proposed these tariffs in September to protect domestic producers, reduce the trade imbalance, etc. At that time, due to pressure from India and other non-FTA partners and also due to feedback from several Mexican industries, Mexico delayed implementation of this tariff increase until August 2026. But on December 3, this proposal was reintroduced, making the legislative process much quicker.

India is seeking exemptions from the tariffs to safeguard its export activity while Government authorities are cooperating to devise an appropriate solution to comply with Global Trade Agreements. Commerce Secretary Rajesh Agrawal recently met with Mexico's Vice Minister of Economy, Luis Rosendo, to discuss these issues and has scheduled future technical meetings.

Another official stated, “The detailed list of items covered is yet to be officially notified but unilateral increases in MFN (most favoured nation) tariffs, without prior consultations, do not align with the spirit of our cooperative economic engagement”. Industry representatives have advocated for many years that the benefits of USMCA can be obtained through a formal trade agreement between India and Mexico.