India and Mexico took a concrete step towards a closer trade relationship on Wednesday, October 28, with the formal launch of negotiations for a Preferential Trade Agreement. The two sides signed the Terms of Reference for the talks in Mexico City, setting out the framework, scope and roadmap for what could become an important new pact for Indian exporters.
The signing was done by Commerce Secretary Rajesh Agrawal and Mexico’s Undersecretary of Foreign Trade, Luis Rosendo Gutierrez Romano, who signed on behalf of Secretary of Economy Marcelo Ebrard Casaubon. The launch came during Agrawal’s two-day official visit to Mexico City, where he also met officials and business representatives to discuss how trade and investment ties can grow.
For India, the timing matters. Mexico is one of Latin America’s largest economies and a gateway to North American supply chains. Indian goods sold to Mexico already run into billions of dollars a year, yet many face steep tariffs that a preferential agreement could lower.
What was agreed on October 28
The Terms of Reference do not fix tariff rates or settle the final deal. They agree on what will be negotiated, how the talks will be run and what a balanced outcome should look like. The Ministry of Commerce and Industry said the framework is aimed at expanding bilateral trade, creating business opportunities, boosting investment flows and building supply chains that are more resilient and diversified.
In a statement shared by the Department of Commerce, both sides described their shared ambition as expanding trade, unlocking investment, strengthening supply chains and creating new opportunities for businesses in both countries. The ministry added that the two countries are ready to turn untapped potential into tangible prosperity through negotiations that are balanced, ambitious and mutually beneficial.
The roots of this round go back to June 2025, when Prime Minister Narendra Modi and Mexican President Claudia Sheinbaum met on the sidelines of the G7 Summit in Canada and agreed to deepen the partnership. Wednesday’s signing is the follow-through on that understanding.
What the talks will cover
The proposed agreement is expected to cover the nuts and bolts of modern trade deals. According to the ministry, the framework includes market access for goods, rules of origin, customs procedures and trade facilitation, dispute settlement, sanitary and phytosanitary measures, technical barriers to trade and trade remedies. Food safety rules, product standards and testing requirements can slow shipments even when tariffs are low, so clarity on those points can matter as much as a cut in duty.
Which sectors stand to gain
The ministry has named eight areas with significant potential: automobiles, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals, medical devices and advanced manufacturing. That list reflects where the two economies fit together. India brings scale in manufacturing, medicines and engineering goods. Mexico brings strong links to global value chains and demand for inputs, machinery and finished products.
Automobiles sit at the centre of the story. Official trade data cited in reports on the launch put India’s merchandise exports to Mexico at $5.73 billion in 2025-26, with automobiles accounting for the largest share at $1.92 billion. Several key Indian exports, including automobiles, textiles, footwear, plastics, steel, chemicals and toys, face tariffs of up to 50 per cent under Mexico’s revised tariff regime. Even a partial easing could change the pricing of Indian products in Mexico quite quickly.
Pharmaceuticals and medical devices are another natural fit, with India a major supplier of affordable medicines. Electronics, chemicals and critical minerals also feature because both countries are trying to secure inputs for manufacturing and clean energy without relying too heavily on a single source.
An early harvest could come first
Commerce and Industry Minister Piyush Goyal has said Mexico is keen on an early-harvest arrangement, according to a Financial Express report from The Hague. An early harvest is an interim step that lets two countries cut or remove duties on selected goods where neither side has major sensitivities, without waiting for a full agreement to be finished.
If that approach is taken, exporters in the chosen product lines could see relief sooner, while negotiators continue work on the wider pact. The ministry has not yet published a list of products for any early harvest, so businesses will be watching the next announcements closely. The two sides also discussed a Mexican business mission to India in the first quarter of 2027, to bring business-to-business meetings and help firms find commercial opportunities.
Why this pact fits India’s wider trade push
The Mexico talks are part of a broader Indian effort to widen trade partnerships beyond traditional markets and make supply chains less fragile. A preferential agreement is a step below a full free trade agreement, focused on identified goods rather than across-the-board liberalisation. Its value will depend on the products covered, the depth of tariff cuts and how workable the rules turn out to be.
Still, Wednesday’s launch changes the conversation from possibility to process. With a framework in place and a business mission planned for early next year, both sides now have a structure to test how far they can go. For Indian exporters watching Mexico’s tariff wall, that is a development worth following.
FAQs
What did India and Mexico agree on October 28, 2026?
They signed the Terms of Reference and formally launched negotiations for a Preferential Trade Agreement, setting the framework, scope, modalities and roadmap for the talks.
Who signed the Terms of Reference?
Commerce Secretary Rajesh Agrawal signed for India, and Undersecretary of Foreign Trade Luis Rosendo Gutierrez Romano signed for Mexico, on behalf of Secretary of Economy Marcelo Ebrard Casaubon.
How much does India export to Mexico?
India’s merchandise exports to Mexico stood at $5.73 billion in 2025-26, with automobiles the largest share at $1.92 billion, according to official trade data cited in reports on the launch.
Which sectors could benefit most?
Automobiles, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals, medical devices and advanced manufacturing were named as areas with significant potential.
What is an early harvest arrangement?
It is an interim step that cuts or removes duties on selected goods sooner, without waiting for a comprehensive deal. Commerce Minister Piyush Goyal has said Mexico is keen on such an arrangement.
India and Mexico have started the hard work now. The next test will be turning a signed framework into tariff relief that exporters can actually use.
