Representative image. D Guisinger, CC BY 2.0, Wikimedia Commons
Why it matters
Mexico has charged duties of up to 50% on some goods from countries without a trade deal, India among them, since 1 January 2026. A preferential trade agreement is India's chosen route to win lower duties on a list of products. Cars and auto parts, India's largest export to Mexico, were among the goods PTI reported as hardest hit. Nothing changes at the border until a deal is agreed and in force.
India and Mexico have formally opened negotiations on an India Mexico trade pact, a preferential trade agreement (PTA) that would cut import duties on a chosen list of goods. The commerce ministry announced on 28 October 2026 that the two sides had signed the Terms of Reference, the document that fixes what the talks will cover and how they will run. Nothing has been agreed on tariffs yet: the signing starts the bargaining, it does not finish it.
The move comes as India’s trade with Mexico is shrinking. Official Department of Commerce data show two-way goods trade fell 9.11% in 2025-26, to about $7.83 billion, mainly because India bought far less from Mexico.
What India and Mexico signed on 28 October
According to the commerce ministry’s release, the Terms of Reference set out the framework, scope, methods and roadmap for the negotiations. The talks were held during a visit to Mexico by Commerce Secretary Rajesh Agrawal, who met Mexico’s Undersecretary of Foreign Trade, Luis Rosendo Gutiérrez Romano. Gutiérrez Romano took part on behalf of Mexico’s Secretary of Economy, Marcelo Ebrard. The news agency ANI reported that the two officials signed the document, and the agency IANS reported that Agrawal was on a two-day official visit to Mexico City.
The release lists the areas the negotiators will work on:
- market access for goods, meaning which products get lower duties and by how much;
- rules of origin, which decide when a product counts as Indian or Mexican and so qualifies for the lower duty;
- customs procedures and trade facilitation;
- sanitary and phytosanitary measures (food safety, animal and plant health rules) and technical barriers to trade (product standards and testing);
- trade remedies, such as anti-dumping duties, and dispute settlement.
The ministry named automotive, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals, medical devices and advanced manufacturing as sectors with potential. The two sides also discussed the possibility of a Mexican business mission to India in the first three months of 2027.
The process traces back to June 2025, when Prime Minister Narendra Modi and Mexican President Claudia Sheinbaum met on the sidelines of the G7 summit in Canada and agreed to deepen ties, the release said.
India Mexico trade in numbers: what the official data show
The table below uses the Department of Commerce’s TradeStat database, which draws on figures from DGCI&S, the government’s trade statistics office. The years are Indian financial years, so 2025-26 means April 2025 to March 2026. Totals, balance and the change in total trade are NewsPlainly’s calculations from those figures.
| India and Mexico, goods trade | 2024-25 | 2025-26 | Change |
|---|---|---|---|
| India’s exports to Mexico | $5,749 million | $5,727 million | -0.38% |
| India’s imports from Mexico | $2,869 million | $2,106 million | -26.59% |
| Total trade | $8,618 million | $7,833 million | -9.11% |
| India’s surplus | $2,880 million | $3,621 million | up $741 million |
India sells far more to Mexico than it buys. Vehicles and parts were the biggest export by a distance, at $1,923 million in 2025-26, followed by electrical machinery ($672 million), machinery and mechanical appliances ($564 million), organic chemicals ($381 million) and medicines ($327 million). Medicine exports rose 66% in the year, from $197 million.
The fall in imports came mostly from fuel. India bought $398 million of mineral fuels and oils from Mexico in 2025-26, against $1,585 million a year earlier. Ores went the other way, rising from under $7 million to $286 million.
For all the attention, trade with Mexico is a small slice of India’s total. It took about 1.3% of India’s goods exports in 2025-26, according to the same TradeStat data.
Why India wants a deal: Mexico’s tariffs of up to 50%
From 1 January 2026, Mexico raised import duties, by as much as 50% on some goods, for countries it has no trade agreement with, a group that includes India, China, South Korea, Thailand and Indonesia. The Press Trust of India (PTI) reported this in December 2025, and IANS said on 28 October 2026 that Indian cars, textiles, footwear, plastics, steel, chemicals and toys face duties of up to 50% under the new regime.
Preliminary estimates put about $2 billion of India’s exports to Mexico in the range of the higher duties, PTI reported in December 2025, with cars, two-wheelers, auto parts, textiles, iron and steel, plastics, leather and footwear among the most affected. Agrawal said then that a preferential trade agreement was the only fast way forward because a full free trade agreement would take much longer.
Under a preferential trade agreement, the goods on the agreed list would enter Mexico at lower duties than the general rates that now apply to Indian products. Goods left off the list would not benefit.
PTA or FTA: what India and Mexico are negotiating
The two terms sound alike but differ in scope.
- Preferential trade agreement (PTA): each side cuts or removes duties on a limited list of products. Agrawal has called it the faster route and described it as compatible with World Trade Organization (WTO) rules, PTI reported.
- Free trade agreement (FTA): duties are cut or removed on most goods traded between the partners, and such deals can go further, into services and investment. India’s FTA with New Zealand is one recent example.
The areas listed in the Terms of Reference are all about trade in goods. The release does not mention services or investment chapters, which fits the narrower model of a preferential trade agreement.
For readers, the practical point is this. Nothing changes at the border yet. Indian exporters to Mexico still pay the current duties, and Mexican goods enter India on current terms, until a preferential trade agreement is negotiated, signed and brought into force by both governments.
What happens next for India Mexico trade talks
The commerce ministry’s release of 28 October did not give a timeline or a date for the first negotiating round. The only dated plan it mentions is the possible Mexican business mission to India in the first quarter of 2027, which the two sides discussed but did not confirm.
Which products make it onto the preferential list is the open question for the sectors PTI named as hardest hit in December 2025, led by cars and auto parts. Until a list is agreed, the 2025-26 figures for India Mexico trade in the table above are the baseline against which any deal can be measured.
Frequently asked questions
Has India signed a trade deal with Mexico?
No. On 28 October 2026 the commerce ministry announced that the two countries signed the Terms of Reference, which formally launches negotiations. No tariff cuts have been agreed yet.
What is the difference between a PTA and an FTA?
A preferential trade agreement cuts duties on a limited list of goods. A free trade agreement cuts duties on most goods traded between the partners and often covers services and investment too.
How much does India trade with Mexico?
Goods trade was about $7.83 billion in 2025-26: $5,727 million of Indian exports and $2,106 million of imports from Mexico, according to the Department of Commerce's TradeStat data.
Why is Mexico charging higher duties on Indian goods?
From 1 January 2026 Mexico raised duties, up to 50% on some goods, for countries it has no trade agreement with, including India, China and South Korea, PTI reported.