TL;DR
Mexico's proposed tariff hikes on countries without FTAs, potentially doubling duties on vehicles and components, have raised significant concerns among Indian automotive exporters.
India's automobile and auto component manufacturers have raised concerns with the government regarding Mexico's proposed plan to more than double tariffs on countries without free trade agreements. This move could significantly impact India's automotive exports to Mexico, which stands as the third-largest destination for Indian car exports after South Africa and Saudi Arabia, accounting for $887 million (₹7,900 crore) in the last fiscal year.
The proposed tariff increases are substantial, with passenger vehicle imports potentially rising from 20% to 50%, and two-wheelers from 15% to 35%. Tariffs on various auto parts could also see a hike from the current 0-35% to 10-50%. These changes, if passed by the Mexican Parliament, are anticipated to take effect from January 2026.
Indian companies, including major players like Maruti Suzuki and Škoda Auto Volkswagen India, annually ship nearly 100,000 vehicles, or about 12% of India's total car exports, to Mexico. Additionally, Indian auto parts makers have subsidiaries in Mexico, and a significant portion of back-end work for auto components occurs in India. Industry executives fear that such a tariff increase will adversely affect Indian companies, particularly in the current geopolitical climate where auto component exports to the US are already under pressure.
