India and Mexico signed terms of reference for a preferential trade agreement (PTA) in Mexico City on 28 October, India's commerce ministry said1. The document sets the framework, scope and roadmap for negotiations1.
Commerce Secretary Rajesh Agrawal was in Mexico City for the two-day visit2. "The visit will see the launch of PTA negotiations with the signing of the Terms of Reference (ToR)," he said in a post on X2.
The talks follow an understanding between Prime Minister Narendra Modi and President Claudia Sheinbaum at the G7 summit in Canada in June 20251. The terms cover how goods win market access, what counts as originating in either country, customs handling and dispute settlement1. They also cover plant and animal health checks, product standards, and safeguard and anti-dumping actions1.
What Mexico's duties cover
Mexico raised import duties on 1,463 tariff classifications to between 5% and 50%, effective 1 January 2026, BusinessLine reported2. The higher rates apply to countries without a trade agreement with Mexico, including India2.
BusinessLine reported one band for the 1,463 lines and said passenger vehicle duties had risen to up to 50%2. It listed these Indian export lines as affected2:
| Indian export lines | Duty since 1 January 2026 |
|---|---|
| Automobiles and auto components | 5% to 50% |
| Passenger vehicles | Up to 50% |
| Textiles and apparel | 5% to 50% |
| Footwear | 5% to 50% |
| Plastics | 5% to 50% |
| Steel | 5% to 50% |
| Aluminium | 5% to 50% |
| Chemicals | 5% to 50% |
| Household appliances | 5% to 50% |
| Toys | 5% to 50% |
| Engineering goods | 5% to 50% |
Mexico said the increases aim to build up domestic manufacturing, raise local content and protect jobs2. BusinessLine said the passenger vehicle duty is a big hurdle for Indian carmakers that count on Mexico as an export market2.
What a PTA can return
India's merchandise exports to Mexico were $5.73 billion in 2025-26, with automobiles accounting for about $1.92 billion, BusinessLine reported2. Total two-way merchandise trade was around $7.83 billion in the year2.
A PTA cuts tariffs on a selected list of products, not the whole tariff schedule. That makes it easier to negotiate than a free trade agreement2. Neither side has published its list. The ministry named automotive, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals, medical devices and advanced manufacturing as sectors with potential for cooperation1. It did not say whether vehicles would be inside the PTA.
The ministry said the proposed deal would expand opportunities for Mexican products and businesses in the Indian market1. Mexico's shipments to India in 2023 were mainly telephones and mobile phones, machinery, integrated circuits, gold, chemicals, scrap metal, auto parts, minerals and alcohol3.
No deadline for the talks was announced. The two sides discussed a Mexican business mission to India in the first quarter of 20271. The ministry's statement did not mention interim relief from the duties while negotiations run1.
Mexico as a base for US-bound supply
For Indian suppliers weighing Mexico as a base for US-bound sales, USMCA origin rules matter. Under the deal, 75% of an automobile's value must come from North America to get preferential treatment4. Mexico's access to the US market is also less settled than it was. The US said on 1 July 2026 that it would not renew USMCA4. The three countries will now review the agreement each year until it expires on 1 July 20364.
The ministry said Mexico is an important market for Indian exporters because of its links to global value chains1.