India and Mexico have formally launched negotiations for a Preferential Trade Agreement (PTA) following the signing of the Terms of Reference (ToR), marking a step towards strengthening economic and commercial ties between the two countries. The framework establishes the scope, procedures and roadmap for negotiations aimed at expanding bilateral trade, encouraging investment and creating new business opportunities.

The proposed agreement is expected to address market access, rules of origin, customs procedures and trade facilitation. Both countries have identified automobiles, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals, medical devices and advanced manufacturing as potential areas for deeper cooperation. The agreement could also help businesses diversify supply chains and strengthen commercial links between India and Mexico.

The negotiations come amid concerns over Mexico's higher import tariffs on products from countries without preferential trade arrangements. The tariff measures, effective January 1, 2026, cover more than 1,400 product categories and impose duties of up to 50 percent on selected imports, affecting several Indian export segments, including automobiles, auto components, engineering goods and chemicals. A preferential trade arrangement could help eligible Indian products secure improved market access, depending on the concessions agreed upon by both countries.

Bilateral merchandise trade between India and Mexico stood at approximately $7.83 billion in FY26. India's exports to Mexico were valued at around $5.73 billion, while imports from the country amounted to approximately $2.11 billion.

Automobiles and auto components are among India's leading exports to Mexico, alongside pharmaceuticals, engineering goods and chemical products. Mexico is also an important destination for Indian businesses seeking access to North American and Latin American markets.

The proposed PTA forms part of India's broader efforts to diversify export destinations, improve the competitiveness of domestic manufacturers and expand its international trade partnerships. However, the final benefits will depend on the products covered, the tariff concessions negotiated and the implementation of the agreement.