India and Mexico are expected to formally launch negotiations for a preferential trade agreement (PTA) this week as New Delhi seeks to protect its exports from tariffs of up to 50 per cent imposed by the Latin American country.
Officials said the two countries have finalised the terms of reference (ToR) for the proposed agreement and are likely to sign the document in the next couple of days, paving the way for formal negotiations.
The proposed agreement is expected to cover major Indian exports, including automobiles, textiles, footwear, plastics, steel, chemicals and toys, which have been affected by Mexico’s revised tariff regime.
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.
𝗧𝗮𝗿𝗶𝗳𝗳𝘀 𝗵𝗶𝘁 𝗜𝗻𝗱𝗶𝗮𝗻 𝗲𝘅𝗽𝗼𝗿𝘁𝘀
The proposed trade agreement comes against the backdrop of Mexico imposing higher import duties on 1,463 products originating from countries that do not have preferential trade arrangements with it.
The revised tariffs, ranging up to 50 per cent, came into effect on January 1, 2026, affecting several major Indian export categories. These include automobiles, textiles and clothing, plastics, steel, household appliances, aluminium, toys, furniture, footwear, leather goods, paper and cardboard, motorcycles, trailers and glass products.
Mexico introduced the measures under a decree linked to its economic development programme, which seeks to increase domestic content in production chains by 15 per cent by 2030. The programme, launched in January 2025, aims to strengthen domestic manufacturing, create 1.5 million jobs and position Mexico among the world’s 10 largest economies by 2030.
Officials indicated that the proposed agreement would focus primarily on preferential trade in goods, rather than a comprehensive free trade agreement covering a wider range of economic activities. Trade experts believe a PTA could provide a quicker mechanism for addressing the tariff challenges faced by Indian exporters.
Unlike a free trade agreement, which generally seeks to eliminate duties on a broad range of products, a preferential trade agreement provides reduced tariffs on selected goods agreed upon by participating countries.
The proposed arrangement could therefore help Indian exporters regain competitiveness in the Mexican market without waiting for a comprehensive trade agreement.
The proposed preferential trade agreement is expected to establish a framework for improving market access and strengthening commercial ties between the two countries. Formal negotiations will begin after the terms of reference are signed, with both sides expected to identify products eligible for preferential tariff treatment.
