The limited trade pact aims to shield Indian exporters from Mexican tariffs of up to 50 per cent imposed on partners without a trade agreement.

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• India and Mexico launched negotiations for a Preferential Trade Agreement and signed the Terms of Reference, according to a Ministry of Commerce and Industry release.
• Terms of Reference are the formal roadmap that sets the boundaries, goals, scope and rules before official negotiations begin.
• Commerce Ministry officials had said in August 2026 that the Terms of Reference were finalised and only the signing timelines needed aligning.
• Mexico imposed tariffs as steep as 50 per cent on over 1,400 products from non-preferential partners, including India.
• The tariff regime was approved by the Mexican Senate and took effect on 1 January 2026.
• Countries without a trade agreement with Mexico, such as India, China, South Korea, Thailand and Indonesia, are affected.
• India-Mexico merchandise trade was $8.74 billion in 2024, with Indian exports of $5.73 billion and imports of $3.01 billion.
• Exports facing the higher duties include automobiles, textiles, footwear, plastics, steel, chemicals and toys.
• India proposed a PTA because a full free trade agreement would take much longer to negotiate.
• The PTA is expected to cover goods market access, rules of origin, customs procedures, trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers to trade and dispute settlement.
• India is also negotiating trade deals with Chile, Peru and the Brazil-led Mercosur bloc.
• A pact with Mexico could help Indian exporters tap deeper into the USMCA region.