After Mexico decided to impose steep tariffs — ranging from about 5% to as high as 50% — on a wide range of goods from countries without free-trade agreements (including India, China, South Korea, Thailand and Indonesia), affected Indian sectors have approached the government seeking relief measures.
Industry bodies representing automobile and engineering goods exporters have written to the Ministry of Commerce, seeking support to navigate the challenges that could arise if the Mexican tariff hike takes effect on January 1, 2026. While some exporters are urging the government to begin talks for a Free Trade Agreement (FTA) with Mexico, others are looking to rework supply-chain routes to mitigate the impact. Uncertainty remains high for sectors such as textiles and automobiles, as Mexico has not yet clarified product-wise tariff slabs.
According to the Global Trade Research Initiative (GTRI), nearly 75% of India’s $5.75 billion exports to Mexico will be hit, with tariffs rising from the current 0–15% range to around 35%. Labour-intensive sectors including garments, textiles and ceramics face duty hikes of 25–35%, posing serious risks to MSME exporters.
The Engineering Export Promotion Council (EEPC) of India has urged the government to initiate FTA negotiations, highlighting Mexico’s strategic importance as a market for Indian engineering goods. In its communication to the government, EEPC underlined the urgent “need for a Free Trade Agreement (FTA) or at least a Preferential Trade Agreement (PTA) between India and Mexico covering the affected sectors.”
Engineering exports to Mexico have already slowed following US tariff actions in August. EEPC data shows that India’s total engineering exports to Mexico fell 12% during April–October 2025, with steep declines across categories: steel (-7%), iron and steel products (-26%), aluminium and products (-56%), auto components (-20%) and two- and three-wheelers (-32%).
The automobile sector is expected to be the worst hit. Mexico is India’s third-largest car export market after South Africa and Saudi Arabia. India shipped around 1.94 lakh passenger vehicles to Mexico last fiscal year, valued at nearly $2 billion. For OEMs such as Skoda Auto, Hyundai, Maruti Suzuki and Bajaj Auto, Mexico is a critical destination for India-made vehicles. Auto component makers have also raised concerns about reduced access to the US market, as several components were routed to the US via Mexico.
Auto industry lobby SIAM, in a letter to the government last month, warned that the tariff hike would directly impact India’s automobile exports to Mexico and sought New Delhi’s intervention with the Mexican government.
“Mexico’s tariff move is more than a cost issue. It signals a shift in how Indian auto and textile exporters need to position themselves in that region. The smart play now is to rethink routing strategy, reassess market entry plans, and build pricing models that can absorb policy swings without hurting demand,” said Jitendra Srivastava, CEO of Triton Logistics & Maritime.
Textile exporters, already under pressure due to uncertainty over potential US tariffs, fear Mexico’s move will further erode their price competitiveness — especially in value-focused apparel lines where margins are thin. “For certain product lines, duty increases in the mid-30% range may alter landed-cost economics,” said Abhishek Dua, Co-founder, ShowroomB2B.