Mexico’s decision to sharply increase import tariffs next year has placed new pressure on India’s major automobile exporters, reshaping trade expectations in one of their most important overseas markets.
According to a Reuters exclusive, the tariff change, approved by President Claudia Sheinbaum’s government, applies to hundreds of items from countries without trade agreements, including India and China.
It arrives during a period of rising global protectionism and mounting US pressure on Mexico to limit commercial engagement with China.
Indian industry groups had attempted to prevent the move, but the confirmed tariff now affects about $1 billion worth of shipments from India.
Policy shift
Mexico plans to raise the import duty on cars to 50% from 20% in 2025.
The government has framed the measure as an effort to support local jobs and strengthen domestic manufacturing.
Business groups in Mexico have pushed back, warning that higher tariffs will lift operational costs and disrupt established supply networks.
The tariff increase hits India’s largest car exporters to Mexico, including Volkswagen, Hyundai, Nissan, and Maruti Suzuki.
These companies have long relied on Mexico as a stable, high-demand market that helps balance production levels across their Indian facilities.
Industry concerns
The Reuters report said the Society of Indian Automobile Manufacturers urged India’s commerce ministry to request that Mexico maintain its existing duty structure for Indian vehicles ahead of the tariff announcement.
The industry group, whose members include Volkswagen, Hyundai, and Suzuki, warned that the proposed change would directly affect Indian automobile exports.
Its letter to the ministry, submitted in November, is being detailed publicly for the first time.
What steps Indian officials or car makers may take now is uncertain.
Mexico remains India’s third-largest car export destination after South Africa and Saudi Arabia, and the confirmed tariff increase could require a reassessment of long-standing market strategies.
Export dependence
Indian car manufacturers have used exports to maximise production and secure economies of scale, as well as to offset periods of weaker domestic demand.
These practices may come under strain as more countries introduce higher trade barriers.
Similar tariff increases have been promoted by US President Donald Trump, adding further complexity to global supply chains that depend on predictable rules.
India exported goods worth $5.3 billion to Mexico in the last financial year.
Cars accounted for nearly $1 billion of that total, according to customs data and the industry letter.
Skoda Auto represents almost half of India’s car exports to Mexico.
Hyundai exported around $200 million worth of vehicles, while Nissan and Suzuki recorded $140 million and $120 million, respectively.
Market dynamics
During meetings with Indian officials last month, car makers noted that most vehicles exported from India to Mexico are compact models with engines smaller than one litre.
These cars are designed specifically for Mexican consumers and are not intended for further shipment to the US.
The industry group stressed that Indian vehicles do not compete with the higher segment models produced within Mexico for the North American market.
Manufacturers also explained that Mexico sells about 1.5 million passenger vehicles annually, and two-thirds of those are imported.
India’s share represents just 6.7% of total sales, according to the first source and the industry letter cited in the report.
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