India and Mexico have officially started negotiations for a Preferential Trade Agreement, taking an important step towards expanding trade and investment between the two countries. 

On 28 October, both sides signed the terms of reference, which outline the key areas and roadmap for the negotiations.

The proposed agreement aims to improve market access, create business opportunities and help companies expand into new markets. It will cover customs procedures, rules of origin, trade barriers and access for goods. These measures could make cross border trade easier and reduce costs for businesses.

Automobiles, chemicals, electronics, pharmaceuticals, medical devices, agriculture and critical minerals are among the sectors identified for stronger cooperation. 

Indian exporters in automobiles, engineering goods and medicines could benefit from improved access to the Mexican market. Mexico could also find new opportunities to sell its products in India.

The talks come at an important time for Indian exporters. Mexico introduced higher import duties on more than 1,400 product categories from countries without preferential trade arrangements, with tariffs reaching 50 percent on certain goods from January 2026. 

A trade agreement could help Indian businesses manage these challenges, depending on the products and tariff reductions both countries negotiate.

Bilateral merchandise trade between India and Mexico reached approximately 7.83 billion US dollars in the financial year 2025 to 2026. India exported goods worth around 5.73 billion US dollars to Mexico during this period.

Both countries are also considering a Mexican business delegation to India in the first quarter of 2027. The visit could help companies connect, explore partnerships and identify investment opportunities.

A Preferential Trade Agreement generally reduces import duties on selected products rather than covering all trade. Its final benefits will depend on the terms both countries agree upon and when the agreement takes effect.

The negotiations could strengthen economic ties and open new opportunities for businesses in both markets.

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