India Mexico FTA under consideration for Engineering Exports

India is considering signing a free trade agreement (FTA) with Mexico as a potential avenue to boost its declining engineering goods exports to the United States, as per engineering industry stakeholders.

The move comes amid concerns over India’s dwindling engineering exports to the U.S., which accounts for 20 per cent of the country’s total engineering shipments.

Data from the Engineering Export Promotion Council (EEPC) shows that these exports to the U.S. declined by 5.7 per cent year-on-year in 2023-24, even as overall engineering exports grew 2.13 per cent to USD 109.3 billion during the same period.

“Most of the USA’s manufacturing has shifted to Mexico, including Tesla’s new plant. The only way for India to increase our engineering goods export to the USA is to have an FTA with Mexico,” said Pankaj Chadha, Senior Vice Chairman of EEPC, underlining the industry’s push for such an agreement.

The council, which represents one-fourth of India’s engineering exports, has been vocal about the need to access the U.S. market through Mexico, where several American companies have established manufacturing bases.

Currently, Indian engineering goods face import duties in the U.S., while Mexico has also imposed a 25 per cent import duty on steel imports from April 2024, according to EEPC.

As India seeks to diversify its export markets and bolster its trade ties, the proposed FTA with Mexico could potentially open up new opportunities for the country’s engineering sector to tap into the lucrative U.S. market indirectly.