India-Mexico Tariffs: Trade Ties and Market Resilience Amid New Non-FTA Duties

Mexico’s decision to impose steep new tariffs on imports from countries without a Free Trade Agreement, including India, is raising questions for trade ties, but Indian equity benchmarks are firm, with Sensex and Nifty gaining on 12 December despite the announcement and lingering global concerns.

Market participants appear to be weighing the limited direct exposure of many Indian listed companies to Mexico against broader global cues, such as interest rate expectations and commodity prices, which continue to guide flows into Indian equities and help support risk appetite among domestic investors.

Mexico has announced a tariff slab ranging from 5% to 50% on more than 1,450 imported products, effective from 1 January 2026, for every trading partner that does not share an FTA with the country, with India falling into that non-FTA category.

The highest 50% duty has been placed on a wide range of goods, including automobile parts, small passenger vehicles, household equipment, toys, textiles, garments, various plastics, different grades of steel, home and office furniture, footwear, leather products, paper, cardboard, motorcycles, aluminium, perfumes, cosmetics, trailers, glass products and soaps, according to Mexican daily El Universal.

Among Asian economies, India, South Korea, China, Thailand and Indonesia are expected to face the brunt of these higher Mexico-India tariffs, since none of these countries currently maintains a comprehensive trade agreement with Mexico that would shield them from the newly announced import duties.

Mexico’s government, led by President Claudia Sheinbaum, has taken this step while under significant pressure from the White House to gradually ease economic and supply-chain dependence on China, though domestic critics in Mexico warn that the move could push up consumer and industrial costs.

Despite the tariff headlines, Indian indices moved higher. Sensex climbed more than 0.5%, trading at 85,212.61, up 394.40 points, close to its intraday peak of 85,282.76, with stocks such as Tata Steel, L&T, Eternal, Maruti Suzuki and Ultratech Cement featuring among the strongest performers.

At the same time, Nifty 50 advanced 112.05 points, or 0.43%, to 26,029.65, also hovering near its day high of 26,038.40, while Nifty Auto added around 0.3%, Nifty IT edged higher, Nifty Metal jumped more than 2%, and indices like Nifty Private Bank, Nifty Realty, Nifty Consumer Durables and Nifty Pharma showed modest to nearly 1% gains.

According to Ponmudi R, CEO of Enrich Money, "domestic markets opened with a strong bullish gap-up, confirming the momentum shift that began yesterday after all major indices retested their rising channel supports. Yesterday's reversal candle has now received full follow-through, and today's gap-up clearly shows buyers reclaiming control of the trend."

The commentary continued, stating that "Despite ongoing macro uncertainty and persistent rupee weakness, the price structure across Nifty, Bank Nifty and Sensex indicates that the broader uptrend remains intact and highly responsive at key technical levels."

Aakash Shah, Technical Research Analyst at Choice Equity Broking Private, noted that "Overall, sentiment remains supported by global stability following the recent US Fed rate cut and easing crude oil prices, although foreign fund outflows and rupee weakness keep traders somewhat cautious. The broader setup suggests a continuation of range-bound movement unless a clear breakout emerges."

Mexico-India tariffs and bilateral trade data

While the latest Mexico-India tariffs introduce fresh uncertainty, trade between the two countries has been expanding in recent years. The Confederation of Indian Industry’s 2024 report ranks Mexico as India’s 31st largest trading partner, with bilateral trade rising from $7.9 billion in 2019-20 to more than $8.4 billion in 2023-24.

The same report highlights that overall bilateral trade has increased at an average Compound Annual Growth Rate of 1.6% during the past five financial years, even as global supply chains have dealt with pandemic disruptions, shifting demand patterns and changes in shipping and logistics costs affecting both exporters and importers.

Indian exports to Mexico have grown more sharply than total trade, moving from $3.6 billion in 2019-20 to above $5.3 billion in 2023-24, equivalent to a 10.1% CAGR over that period, while India’s trade balance shifted from a negative $0.7 billion to a surplus of about $2.2 billion as imports from Mexico decreased.

The evolving bilateral picture, including the Mexico-India tariffs, can be summarised as follows.

Indicator	2019-20	2023-24	Comment
Total India-Mexico trade	$7.9 billion	Over $8.4 billion	Average 1.6% CAGR
Indian exports to Mexico	$3.6 billion	Over $5.3 billion	10.1% CAGR
India’s trade balance with Mexico	-$0.7 billion	$2.2 billion	Shift to surplus as imports fall

India-Mexico trade, companies and sector exposure

Beyond simple trade flows, India-Mexico economic ties involve many Indian and Mexican companies operating or investing in each other’s markets, with major Indian investments in Mexico reported by the Embassy of India in Mexico City across information technology, pharmaceuticals, automotive and several manufacturing-related industries.

Almost all leading Indian IT and ICT companies, including TCS, Infosys, Tech Mahindra, Aptech, Hexaware, Wipro, Patni Computer Systems and Birlasoft, run operations in Mexico, while pharmaceutical groups such as Lupin, Dr. Reddy's Laboratories, Zydus, Claris Life Sciences, Hetero Drugs, Sun Pharma and Solara have also set up facilities or investments there.

In addition, Parle has recently started food-processing manufacturing in the State of Mexico, and various Indian firms have deployed capital into production of auto components, tyres, packaging materials and electrical products, linking India-Mexico trade more closely to global automotive and consumer supply chains.

TORNEL, a Mexican tyre producer for cars and trucks, is owned by India’s JK Tyre; Bajaj Auto has arrangements in Mexico for assembling and marketing two-wheelers and three-wheelers; and the Samvardhana Motherson Group has plants in Puebla, San Luis Potosí and several northern states, supplying auto parts to Original Equipment Manufacturers like Audi and VW.

Other notable Indian investments in northern Mexico include Flex Americas in Tamaulipas, Varroc Lighting in Monterrey, which manufactures modular LED lighting systems for automobile clusters, and KEC operations in the Monterrey region, underlining the depth of industrial links that could be indirectly influenced by any change in tariff structures.

Capital has also moved in the opposite direction. Mexican companies such as Cinepolis, Tremec, Nemak, Softec, Metalsa, Ruhrpumpen, KidZania and Bimbo, among others, have committed funds to Indian projects in sectors from cinemas and auto components to industrial equipment and consumer products.

NEMAK, part of the ALFA Group of Mexico, has invested $11 million in a manufacturing plant located in Chennai; SOFTTEK, an IT firm based in Monterrey, invested $26 million to acquire an Indian service-sector company in Bangalore, becoming the first Latin American firm to do so, and Great Foods & Beverages of Mexico has deployed about $10 million in India for fruit chill bars and noodles.

For finance readers tracking India-Mexico trade and the newly announced Mexico-India tariffs, the data suggests that while higher duties may affect specific export lines and supply chains from 2026, Indian equity markets are currently focused more on domestic growth drivers, global rate cuts and sector-specific trends than on this particular trade development.