Industry faces 20-day window to respond as largest passenger vehicle market imposes steep duties
12 Dec 2025 | 2310 Views | By Shristi Ohri
Saharsh Damani, CEO of the Federation of Automobile Dealers Associations (FADA), has called Mexico's new 35-50% tariff on Indian automobiles a "serious challenge" as the country prepares to implement duties on imports from countries without free-trade agreements from January 1, 2026.
"Industry and Government's task is cut out as ...
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Saharsh Damani, CEO of the Federation of Automobile Dealers Associations (FADA), has called Mexico's new 35-50% tariff on Indian automobiles a "serious challenge" as the country prepares to implement duties on imports from countries without free-trade agreements from January 1, 2026.
"Industry and Government's task is cut out as they need to swiftly activate their diplomacy to set things right," said Damani, highlighting the urgency of the situation with only 20 days remaining to respond.
According to Damani's analysis, Mexico currently represents India's largest passenger vehicle export market. In FY2024-25, India exported approximately 1.94 lakh passenger vehicles worth $1.9 billion (around ₹15,800 crore) to Mexico, accounting for nearly one-fourth of India's total car exports.
The tariff increase will hit major Indian automakers hard. Damani notes that Maruti Suzuki India exports 66,000-70,000 units annually to Mexico—representing 22-25% of its total exports—including popular models like the Baleno, Swift, Dzire, and Brezza. Hyundai Motor India ships 25,000-30,000 units including the Grand i10 Nios, Aura, Venue, and Creta, while the Volkswagen Group accounts for 55,000-60,000 units of the Virtus, Slavia, Taigun, and Kushaq. Nissan India also exports several thousand Magnite units, sold as the Kicks in Mexico.
The two-wheeler sector faces similar challenges. According to Damani, Bajaj Auto ships 40,000-50,000 units annually to Mexico as part of its 1.48 million total exports, including the Platina, Pulsar, and Boxer models. TVS Motor Company exports 10,000-15,000 units, Hero MotoCorp sends 5,000-10,000 units, and Royal Enfield ships 2,000-5,000 premium motorcycles to the market.
Beyond vehicles, Damani's analysis reveals that Mexico accounts for nearly one-third of India's global safety-airbag exports and 20% of flat-rolled stainless steel exports. While India enjoys strong leverage in aluminium with 53% Mexican market share, ceramics, and certain tractor segments totaling ₹4,900 crore of "hard-to-replace" goods, the automobile segment has no immediate alternative supplier base in Mexico.
Mexican authorities have defended the tariff hike as necessary to protect domestic industries and reduce dependence on imports. The move comes months after the United States imposed similar duties on India, and analysts suggest Mexico may be attempting to align more closely with US trade expectations ahead of the 2026 review of the United States-Mexico-Canada Agreement.
The tariffs apply to more than 1,400 products including auto parts, textiles, plastics, steel, clothing, and household appliances from Asian countries without trade agreements with Mexico, including India, China, South Korea, Thailand, and Indonesia. Mexico expects to generate approximately $3.76 billion in additional revenue from these measures.
Indian industry bodies, including the Society of Indian Automobile Manufacturers, had urged India's commerce ministry in November to press Mexico to maintain the status quo on vehicle tariffs. With bilateral trade between India and Mexico reaching $11.7 billion in 2024, and India enjoying a substantial trade surplus, the new tariffs threaten to significantly reshape the economic relationship between the two countries.