While a Free Trade Agreement (FTA) with Chile could be inked in the near future, India has already launched negotiations for a Preferential Trade Agreement (PTA) with Mexico, one of the strongest economies of the region and a close political partner of New Delhi.

India and Mexico took an important step towards strengthening their economic and trade relations with the signing of the Terms of Reference on the PTA that establish the framework, scope, modalities, and roadmap for negotiations aimed at creating new economic opportunities for both countries.

The Terms of Reference cover key negotiating areas, including 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.

The proposed agreement seeks to leverage the complementarities between the two economies and expand opportunities for Mexican products and businesses in the Indian market. 

With its strong linkages to global value chains, Mexico is an important market for Indian exporters and investors. Sectors with significant potential for cooperation include automotive, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals, medical devices, and advanced manufacturing, among others.

Strengths Of Mexican Economy

Mexico ranks as the 2nd largest economy in Latin America, after Brazil. It is considered the leading exporter in the whole of Latin America - one-third of the exports of the region has Mexican origins.

The strength of Mexico in terms of its economy lies in the responsible economic, financial, and commercial policies, which aim to strengthen the domestic market. 

For example, Mexico’s economic development strategy includes the strengthening of consumption as the effect of social programmes and greater financial inclusion, promoting private investment in strategic sectors, increasing public investment, and increasing trading relations with other countries for the reconstruction of global value chain.  

Mexico is the 13th largest economy in the world, while being the leading exporter in Latin America.  Mexico is considered one of the most open economies in the world, with limited restriction to trade and has access to 50 countries through its FTAs which will give India access to these markets once the bilateral PTA is in place.

India-Mexico Tango

Economic and commercial cooperation, driven by increasing bilateral trade and investments, have been the major drivers of the relationship in the recent years, particularly in the context of near-shoring opportunities offered by Mexico with respect to US markets. Indian companies see Mexico as a major investment destination with access to the US-Mexico-Canada Agreement (USMCA) region (previously NAFTA) and Latin America.

Few are aware that India is Mexico’s ninth largest trading partner with a bilateral trade of US$ 11.090 billion in 2025 – accounted for Indian exports of US$ 9.13 billion to Mexico and imports of US$ 1.969 billion from Mexico. 

The most important items of exports from India are automobiles and auto parts, pharmaceuticals, engineering goods, and chemical products. From the Mexican side, the most important item is crude oil, which occupies 75% of its export basket. Other products of export from Mexico to India are gold and related jewellery, chemical compounds, and telephone machinery.

Several Indian companies have invested in Mexico in recent years to take advantage of the phenomenon of near-shoring. The three strongest performing areas for Indian investments in Mexico are information technology, pharmaceutical, and automotive sectors. TCS, HCL, Infosys, Tech Mahindra, First Source, Cognizant, NIIT, Aptech, Hexaware, Wipro, BirlaSoft, Zoho etc have operations in Mexico. Several Indian pharmaceutical firms such as Lupin, Dr. Reddy’s Laboratories, Zydus, Claris, Life Sciences, Hetero Drugs, Sun Pharma, MSN, and Solara have investments and operations in Mexico.

From the Mexican side, 17 major companies have a presence in India. Leading Mexican companies like Nemak, Metalsa, Mexichem, Great Foods & Beverages, RuhrPumpen, Cinepolis, and Kidzania have invested in India in recent times.

Bimbo has acquired several Indian companies like Harvest Gold and others to become the largest bread manufacturer of India. Mexican IT company Softtek became the first Latin American company to have a presence in India as a service provider. Cinepolis has opened over 350 screens all over India, including in tier-2 cities. The total investment of Mexican companies in India is approximately US$ 810 million, making the country an emerging investor from Latin America in India.

Heirs To Civilisational Heritage

India and Mexico have similarities in geo-climatic conditions, biodiversity, cultural and family values. Both are heirs to a great civilisational heritage and contacts between them go back centuries. 

Mahatma Gandhi’s statues and busts adorn some major Mexican cities like Mexico City, Guadalajara, Acapulco, Guanajuato, Cancun, and San Luis Potosi. 

The writings of Nobel laureate and Indophile Octavio Paz, who was the Mexican Ambassador to India (26 April 1962 – 18 October 1968), on his long experiences in India, have had a profound impact in Mexico. 

Mexican wheat varieties, especially the Sonora wheat variety and other hybrids developed by Indian scientists in collaboration with Mexican and international scientists, including Norman Borlaug based in CIMMYT, Mexico, were instrumental in the success of the Green Revolution in the 1960s and subsequent food self-sufficiency in India.

This legacy across literature, arts, and agriculture will form the basis for the bilateral PTA. 

(The writer is a commentator on geopolitics and geoeconomics. Views expressed are personal.)