As India’s engineering goods export to the US continues to decline, the Indian government has agreed to study the possibility of signing an FTA (free trade agreement) with Mexico as several US companies, including Tesla, have set up manufacturing bases there.
Indian industry wants to access the US market by having an FTA with Mexico as the US is the top destination for India’s engineering exports.
Pankaj Chadha, senior vice chairman, Engineering Export Promotion Council (EEPC) said, “Most of the USA’s manufacturing has shifted to Mexico, including Tesla’s new plant. And the only way for India to increase our engineering goods export to the USA is to have an FTA with Mexico.” EEPC, a body affiliated with the commerce ministry, represents one fourth of India’s engineering exports, while engineering goods account for 25% of the merchandise exports from India.
Agreeing to looking into the proposal, commerce secretary Sunil Barthwal said, “We are trying to see that the FTAs are with the complimentary countries. From the point of view of which countries and where we should have FTAs. We are also looking at countries which have a larger number of FTAs with other countries.”
“If Mexico has an FTA with the USA, then I should look at Mexico as a plus country in terms of FTA; this has more potential for FTA. In Latin America we will look at the Mexico issue,” said Barthwal. He was speaking with industry representatives in Pune at the Mahratta Chamber of Commerce, Industry and Agriculture (MCCIA).
According to EEPC, the export of engineering goods increased 2.13% to USD 109.3 billion year-on-year in 2023-24. However, engineering exports to the U.S., which accounts for 20% of the total engineering exports from India, declined 5.7% year-on-year in 2023-24.
Indian engineering goods attract import duty in the US. Mexico has also imposed an import duty of 25% on steel imports from April 2024, said EEPC.