India Seeks Preferential Trade Agreement with Mexico Amid Tariff Hike

India has started discussions on a Preferential Trade Agreement (PTA) with Mexico to cushion the impact of steep tariff increase by it on the countries with which it does not have any Free Trade Agreement (FTA) . “Based on their request, we have engaged. The only fast way forward is to try to get into a PTA because an FTA will take a lot of time,” commerce secretary Rajesh Agrawal told reporters. Citing support for local production and correction of trade imbalances, Mexico has approved an increase in import tariffs ranging from 5 to 50% from January 1 on 1,455 tariff lines within the WTO framework, targeting non-FTA partners. Through these tariffs Mexico seems to be trying to address deep supply chain linkages with China that have developed over time. The tariff increase by Mexico is World Trade Organisation (WTO) compatible as it is within the ceiling it has committed at the world trade watchdog. So these tariffs cannot be challenged at the WTO. “We have proposed the best way forward, a WTO compatible way where if our supply chains are not the target, then we can create a PTA and try to get concessions that are required for Indian supply chains and also similarly offer them concessions where they have export interest to India without our support,” Agrawal added. After the announcement of tariffs, the embassy of India had raised immediate concerns with Mexico’s Ministry of Economy on September 30, which clarified that the measure is not directed against India and reaffirmed its commitment to bilateral relationship. Through continuous engagement thereafter, a virtual meeting between Commerce Secretary Mexico’s Vice Minister Dr. Luis Rosendo was held on 2 December 2025, agreeing to pursue a trade agreement to mitigate the impact promptly. The technical discussions on the PTA have been initiated from 12 December 2025. “As of now, we have a clear pathway and what path we are going to take and what is the timeline we are looking at,” the commerce secretary said. India exported $ 5.75 billion worth of goods to Mexico in 2024-25 and according to the commerce ministry estimates the move by Mexico impacts $ 2 billion worth of shipments. The sectors most impacted are automobile, two-wheelers, auto parts, textiles, iron and steel, plastics, leather and footwear. India’s imports from Mexico last year were $ 3.01 billion. It has a trade surplus of $ 2.72 bn. Indian companies have also invested in Mexico in large numbers. At present there are 200 odd Indian companies with presence there whose total investments stand at $ 4 billion. “There is a good amount of supply chain integration and that will get impacted with these tariffs,” the commerce secretary added.