India and Mexico will sign the terms of reference (ToR) this week to formally launch negotiations for a preferential trade agreement (PTA), aiming to protect Indian exports from recently imposed high tariffs in the Mexican market, officials said.
The proposed agreement is expected to cover key Indian exports, including automobiles, textiles, footwear, plastics, steel, chemicals and toys, which face tariffs of up to 50% under Mexico’s new tariff regime.
Both countries have finalised the terms of reference and are expected to sign the document in the next couple of days, the officials said, requesting anonymity. Commerce secretary Rajesh Agrawal is visiting Mexico from Monday as part of a week-long trade mission that also includes Brussels, the headquarters of the European Union.
The proposed India-Mexico PTA is expected to help Indian exporters mitigate the impact of higher tariffs imposed by the Mexican government on 1,463 items imported from countries that do not have a bilateral trade arrangement with Mexico, such as a PTA or a free trade agreement (FTA).
Experts said signing the terms of reference would mark the first step towards protecting Indian exporters from the higher duties, particularly in the automobile sector.
{{/usCountry}}Experts said signing the terms of reference would mark the first step towards protecting Indian exporters from the higher duties, particularly in the automobile sector.
{{/usCountry}}According to government trade data, India’s merchandise exports to Mexico stood at $5.73 billion in 2025-26, with automobiles accounting for the largest share at $1.92 billion.
The list of products affected by Mexico’s tariff measures includes automobiles, textiles and clothing, plastics, steel, household appliances, aluminium, toys, furniture, footwear, leather goods, paper and cardboard, motorcycles, trailers and glass products.
The tariff measures took effect on January 1 under a decree linked to Mexico’s Plan, which aims to increase domestic content in production chains by 15% by 2030. Launched in January 2025, the initiative seeks to make Mexico one of the world’s 10 largest economies by 2030, revive local industries and create 1.5 million jobs.
PTA seen as faster route to protect exports
Experts said negotiating a bilateral PTA could help India address the tariff challenge more quickly than pursuing a comprehensive FTA, which would take relatively more time to conclude.
One official said the proposed agreement is expected to focus exclusively on preferential trade in goods.
A PTA generally has a limited scope and provides a positive list of products on which tariffs are reduced, though they are rarely eliminated entirely. An FTA, by contrast, seeks to eliminate tariffs on a much wider range of goods, subject to a negative list of excluded items.
India-Mexico trade stood at $7.83 billion in FY26
Bilateral merchandise trade between India and Mexico stood at around $7.83 billion in 2025-26, according to government data.
India exported goods worth approximately $5.73 billion to Mexico during the financial year, while imports from the Latin American country stood at $2.1 billion.
India’s major exports to Mexico include automobiles and auto parts, pharmaceuticals, engineering goods and chemical products.
Mexico’s exports to India are dominated by crude oil, which accounts for almost three-fourths of its total shipments to the country. Other products supplied by Mexico include gold and related jewellery, as well as chemical compounds.
The proposed PTA is expected to provide a framework for preferential market access for selected goods, with negotiations set to begin following the formal signing of the terms of reference.