Mexico Tariff Explained: Indian Auto Sector To Take A Hit? Analysing Overall Impact

Mexico’s plan to raise import tariffs on goods from India and other Asian economies is set to affect sectors where Indian exporters have established steady demand, especially passenger vehicles and auto components. The Mexican Senate has approved tariff increases ranging from 5% to 50% on more than 1,400 items from countries without trade agreements with Mexico. The duties will apply from January 2026.

India has built a strong export position in Mexico across vehicles and auto components. The proposed tariff changes come at a time when India exported nearly $2 billion worth of auto-related products to Mexico in FY25. India’s worldwide auto-related exports stood at $21.8 billion in the same year, placing Mexico among India’s most significant markets in this segment, according to Commerce Ministry's data. Passenger vehicles, two-wheelers and a wide range of components form the largest share of India’s shipments to Mexico.

Government data showed that vehicles and auto components remain the biggest items in India’s export basket. Pharmaceuticals, engineering goods and chemical products also form part of India’s outbound mix, with these sectors continuing to drive sales into Mexico through 2024.

India’s country-wise export data shows that the United States continues to be its largest global market, followed by the UAE and the Netherlands. Even as Mexico is the 21st largest export market for India, the central American nation's position in the export table remains strong due to sustained demand for vehicles and auto components. The tariff increase may prompt Indian firms to reassess pricing, supply chains and market focus once the final schedule is issued.

Vehicles and auto components form the largest part of India’s export profile to Mexico. Passenger vehicles, two-wheelers and a wide range of auto components — including gearboxes, axles, safety systems and vehicle bodies — account for a major portion of outbound shipments. These items continue to dominate India’s overall export mix alongside pharmaceuticals, engineering goods and chemical products.

Midsize passenger cars, scooters, motorcycles, tractors and a long list of components such as axles, braking systems, road wheels and safety belts record steady demand in Mexico, according to data available on Ministry of Commerce and Industry's website.

India’s shipments of cars with engine capacities between 1,000cc and 3,000cc, scooters, and motorcycles over 250cc form some of the highest-value items exported to the Mexican market, according to Commerce Ministry's data. Components such as gearboxes, differential assemblies and transmission parts also appear among the top items with significant exposure.

At the same time, the data highlights categories with lower exposure. Items such as bicycle parts, wheelchairs, parts of three-wheelers and selected low-volume components record minimal or no exports to Mexico in FY25. These items represent the lowest share of India’s shipments to the country.