India in talks with Mexico to find solutions to avoid 50% tariffs — Why it matters

Mexico tariffs: India is in talks with Mexico over the South American country's recent announcement of unilaterally raising tariffs on a number of Asian countries' products, including New Delhi, an official said on Saturday.

According to a PTI report, while India is engaging with Mexico to find mutually beneficial resolutions, New Delhi reserves the right to take appropriate measures to protect the interests of its exporters.

India, China, South Korea, Thailand and Indonesia are among the countries facing steep Mexico tariffs up to 50%, as they do not have a free trade agreement with the nation.

“The Department of Commerce is engaged with Mexico's Ministry of Economy to explore mutually beneficial solutions which align with global trade rules,” the official said.

The person indicated that India might take steps to protect its own traders while talks go on.

“India reserves the right to take appropriate measures to safeguard the interests of Indian exporters, while continuing to pursue a solution through constructive dialogue,” the official added.

High-level meeting with Mexico convened

The official who spoke to PTI said that India was already engaged with Mexico when the country was tabling its initial bill in this regard.

The Embassy of India in Mexico raised the issue with the Ministry of Economy on September 30 and sought special concessions that would shield its exporters from the 50% Mexico tariffs.

"India values its partnership with Mexico and stands ready to work collaboratively toward a stable and balanced trade environment that benefits businesses and consumers in both countries," the official said.

Both the countries are deliberating on starting negotiations for a free trade agreement, which would exempt India from the Mexico tariffs, which is already bearing the brunt of 50% US tariffs. Terms of Reference to begin the talks are likely to be finalised in the coming days.

A high-level meeting in this regard between Commerce Secretary Rajesh Agrawal and Mexico's Vice Minister of Economy Luis Rosendo has already taken place and follow on technical meetings are expected soon.

The government official further said that the actual impact on Indian exports will depend on the criticality of Indian exports to domestic supply chains in Mexico and ability of Indian companies to secure exemptions or pass on the tariff cost to the Mexican consumers.

India believes that unilateral increases in MFN (most favoured nation) tariffs, without prior consultations, do not align with the spirit of our cooperative economic engagement or with the principles of predictability and transparency underpinning the multilateral trading system.