The increase in tariffs in Mexico will impact India’s auto exports, threatening companies’ volumes and margins.
The Mexican Senate has approved a tariff package to protect national industry and producers. This tariff package will come into effect from January 1, 2026. Select products from Asian countries, including India and China, will be subject to import duties of up to 50 percent from 2026. Automobiles, auto parts, textiles, clothing, plastics, steel, metals, and footwear are the main targets. Tariffs on most products will be around the 35 percent slab, but passenger vehicle duties will increase from 20 percent to 50 percent.
The Indian automobile sector will be significantly impacted.
The industry says that vehicles account for nearly a third of India’s automobile sector exports, which accounted for approximately $5.7 billion worth of goods to Mexico in 2024-25. However, the tariffs imposed by Mexico are likely to be particularly impacted. Indian-made cars like the Hyundai Creta, Kia Magna, and Volkswagen are very popular in Mexico. India is Mexico’s fifth-largest auto supplier. The doubling of tariffs is likely to harm the Indian auto industry.
Auto Industry Expresses Concern
The Indian auto industry has expressed concern to the government over Mexico’s proposal to more than double import duties on countries not part of the free trade agreement. Representatives from the Society of Indian Automobile Manufacturers (SIAM) and the Auto Component Manufacturers Association (ACMA) met with officials from the Commerce and Industry ministries to express their concerns about the challenges facing vehicle and component exports to the foreign market.
Volumes and margins of major auto companies at risk
Jahol Prajapati, research expert at Samco Securities, said, “This is directly impacting Indian car exporters to Mexico, primarily Volkswagen, Hyundai, and Maruti Suzuki, threatening volumes and margins in a market that accounts for approximately 9 percent of India’s global automobile exports.” Japati says that, in addition to auto, increased tariffs on engineering goods, electronics, and metals are likely to reduce demand. However, certain Indian products with strong market shares may suffer price losses rather than volume losses.
India’s Car Export Market May Suffer
Auto sector expert Chintan Sathe says Mexico is a major destination for Indian car exporters. Mexico contributed $887 million (₹7,900 crore) in the last fiscal year, making it the third-largest market after South Africa and Saudi Arabia. Automobile companies like Maruti Suzuki and Skoda Auto together export approximately 100,000 vehicles annually, accounting for approximately 12 percent of India’s total car exports. Auto sector reports indicate that Indian car manufacturers exported 770,000 passenger vehicles in the last fiscal year, indicating the importance of the Mexican market for Indian car manufacturers. According to the report, Mexico is India’s largest two-wheeler export market ($390 million) and the second-largest three-wheeler market ($51 million). Mexico is also the third-largest destination for Indian auto parts, with exports reaching $834 million in FY2025.
