Mexico’s decision to increase import tariff on cars to as much as 50% will impact about $1 billion worth of vehicle exports from India, Reuters reported.
Mexican President Claudia Sheinbaum has approved an increase in import duties, effective next year, on hundreds of goods from countries without trade agreements with Mexico, including India and China.
The tariff on car imports will increase from 20% to 50%, affecting automakers such as Volkswagen, Hyundai, Nissan, and Maruti Suzuki.
The policy is intended to protect local employment and manufacturing, and it also reflects U.S. pressure on Mexico to scale back its commercial ties with China.
Some Mexican business groups have warned that higher tariffs could lead to increased costs.
According to customs data cited by Reuters, India exported $5.3 billion worth of goods to Mexico in the last financial year, with vehicles accounting for nearly $1 billion.
The data also indicates that Skoda Auto makes up almost half of India’s car exports to Mexico.
Hyundai’s shipments were valued at roughly $200 million, while Nissan exported about $140 million worth of vehicles and Suzuki around $120 million.
The Society of Indian Automobile Manufacturers (SIAM), an industry group representing companies such as Volkswagen, Hyundai, and Suzuki, wrote to India’s commerce ministry in November, requesting it to urge the Mexican government to maintain current import duty levels on cars shipped from India.
The letter, sent prior to the approval of the tariff hike, cautioned that the proposed increase would have a direct impact on India’s automobile exports and called on the Indian government to initiate discussions with Mexican officials.
The tariff hike could lead Indian carmakers to reconsider their strategies and operations tied to Mexico, which ranks as India’s third-largest market for automobile exports after South Africa and Saudi Arabia.
In discussions with Indian officials last month, automakers said that most vehicles shipped from India to Mexico are compact, entry-level models with engines under one liter, designed to meet Mexican consumer preferences and not meant for re-export to the U.S.
Mexico sells around 1.5 million passenger vehicles each year, about two-thirds of which are imported, with Indian-made vehicles accounting for roughly 6.7% of overall sales.
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