Terms of reference (ToRs) set the framework and scope for trade-pact negotiations.
The proposed PTA aims to resolve issues arising out of Mexico’s decision to impose as much as 50% tariffs on imports from its non-preferential trade partners, including India, from January 1. The high tariffs could affect $2 billion of India’s exports to Mexico, especially automobiles, two-wheelers, auto parts, textiles, iron and steel.
“We are looking at January for the ToRs as technical-level talks are going on,” said an official.
India’s outbound shipments to Mexico totalled $5.75 billion in 2024-25 with light vehicles, motorcycles, base metals, auto parts, machinery, textiles and pharmaceuticals being the key exports. Imports, led by crude petroleum oil, smartphones and gold, amounted to $2.9 billion.
Mexico first introduced the tariff proposal in September to support local production and reduce trade imbalances, but later deferred it to August 2026, after concerns were raised by non-FTA partners including India and by Mexican industry groups. However, the proposal was resubmitted on December 3, accelerating the legislative process.
In September, India had sought special concessions to shield its exports from the new tariffs, said people familiar with the matter.”Given Mexico’s importance as a key export destination for Indian engineering products, our industry members are deeply concerned that these measures could erode their competitiveness in the Mexican market,” said Engineering Export Promotion Council chairman Pankaj Chadha, suggesting that the proposed PTA should cover tariff-affected sectors.
A trade deal with Mexico will help Indian exporters benefit from the US-Mexico-Canada Agreement (USMCA), especially since Mexico has a manufacturing ecosystem besides helping tide over the 50% tariffs imposed by the US.
Trade observers have also cited the need for Mexico’s negotiations with the US for a USMCA review, and pressure from Washington to align with the US on increasing tariffs against China and prevent trans-shipment to the US.