India and Mexico have officially launched negotiations for a Preferential Trade Agreement (PTA) aimed at strengthening bilateral trade, increasing investments and creating new business opportunities. The two countries signed the Terms of Reference (ToR), establishing the framework and roadmap for negotiations.

The proposed agreement will cover market access for goods, rules of origin, customs procedures, trade facilitation, dispute settlement and technical trade regulations. Key sectors offering cooperation opportunities include automobiles, pharmaceuticals, chemicals, electronics, engineering goods and advanced manufacturing.

Bilateral trade between India and Mexico declined 9.11% to USD 7.83 billion in FY2025–26, compared with USD 8.61 billion in the previous fiscal year. India recorded a trade surplus of USD 3.62 billion during the period.

The proposed PTA is particularly significant following Mexico's increase in import tariffs, ranging from 5% to 50%, on products from countries without free trade agreements. The higher duties could affect Indian exports, including textiles, automobiles, footwear, chemicals and engineering products.

A trade pact could help Indian exporters improve competitiveness, diversify export markets and strengthen access to Mexico, an important gateway to North America. Both countries are also exploring a Mexican business mission to India in early 2027 to facilitate business-to-business meetings and identify investment opportunities.