New Delhi– Mexico’s sudden decision to hike import tariffs on passenger vehicles from 20% to 50% starting next year will hit nearly $1 billion in annual automobile exports from India, dealing a severe blow to major manufacturers such as Volkswagen (Skoda), Hyundai, Nissan and Maruti Suzuki.
Mexican President Claudia Sheinbaum’s administration approved the steep increase on Wednesday for hundreds of products from countries without free-trade agreements, including India and China, citing protection of domestic jobs and manufacturing. The move also aligns with U.S. pressure on Mexico to curb Chinese influence.
India is Mexico’s third-largest car import source after South Africa and Saudi Arabia. Customs data show Indian carmakers shipped vehicles worth roughly $1 billion to Mexico last fiscal year out of total bilateral merchandise trade of $5.3 billion. Skoda Auto Volkswagen India alone accounts for nearly half of that volume, followed by Hyundai ($200 million), Nissan ($140 million) and Maruti Suzuki ($120 million).
The Society of Indian Automobile Manufacturers (SIAM) had urgently written to India’s Commerce Ministry in November, requesting diplomatic intervention to “maintain status quo” on tariffs. The previously unreported letter warned that the proposed hike would directly jeopardise Indian exports and sought New Delhi’s engagement with Mexican authorities. Sources say no effective intervention materialised before the tariffs were finalised.
Industry executives stressed that most India-made cars sent to Mexico are sub-1.0-litre compact models tailored for the local market and not re-exported to the U.S., posing no threat to Mexican or North American production. Indian vehicles represent only 6.7% of Mexico’s 1.5 million annual passenger-vehicle sales.
The development complicates Prime Minister Narendra Modi’s “Make in India” pitch as a cost-competitive alternative to China, especially as global trade barriers rise under the shadow of U.S. President Donald Trump’s tariff policies.