India’s export momentum is set to face fresh headwinds as Mexico announces a sharp hike in import tariffs on countries with which it does not have a trade agreement, including India. The new tariff regime, effective January 1, 2026, will raise duties on hundreds of product categories—such as automobiles, auto components, textiles, plastics, steel, machinery and chemicals—to as high as 50 per cent, with most items attracting tariffs of around 35 per cent.
According to Reuters, India exported goods worth approximately $5.3 billion to Mexico in the last fiscal year. Passenger vehicles alone accounted for nearly $1 billion, but the exposure spans multiple sectors. For Indian manufacturers, Mexico has long served as a strategic gateway to the broader Latin American market, making the sudden duty hike a structural setback rather than a short-term disruption.
The Federation of Indian Export Organisations (FIEO) expressed concern, noting that steep tariffs could significantly erode the competitiveness of Indian exporters in key sectors such as automobiles and auto components, machinery, electronics, pharmaceuticals, textiles and plastics. FIEO highlighted that these duties threaten to disrupt supply chains painstakingly built over several years and emphasised the urgency of fast-tracking a comprehensive India–Mexico trade agreement.
Industry stakeholders echoed similar concerns. Tej Contractor, Director at MCC Container Lines, said the impact would not be limited to India alone, warning of broader implications for global trade flows—particularly in automotive and pharmaceutical pricing, as well as machinery and auto components.
In a LinkedIn post, Saharsh Damani, CEO of the Federation of Automobile Dealers Associations (FADA), described the situation as a serious challenge with limited time for response. While India holds strong leverage in segments such as aluminium, ceramics and certain tractor categories—amounting to nearly ₹4,900 crore in “hard-to-replace” goods—he cautioned that the automobile sector lacks immediate alternative supplier bases in Mexico.
On pharmaceuticals, Vijay Shetty, Senior Vice President – Global Distribution and Supply Chain at Alkem Laboratories, downplayed the long-term impact, noting that India is among the largest suppliers of medicines to Mexico. He pointed out that Latin American companies lack the in-house capability to manufacture complex pharmaceutical products, making higher tariffs potentially counterproductive and costly for Mexico itself.
Export-oriented Indian manufacturers, especially in engineering goods, textiles and plastics, have relied on Latin American markets to diversify beyond traditional destinations such as the US, Europe and Africa. A sudden spike in tariffs undermines price competitiveness in these developing markets, forcing companies to reassess supply chains, investment plans and product strategies.
At a broader level, the development highlights vulnerabilities in India’s current trade framework. In the absence of bilateral or regional trade agreements with Mexico, Indian exporters remain exposed to policy shifts beyond their control. The episode underscores the need for India to recalibrate its trade diplomacy and accelerate efforts to secure market access in fast-growing regions like Latin America.
