Mexico’s move to raise import tariffs on cars to as high as 50% is likely to hit roughly $1bn in vehicle exports from India, reported Reuters, citing sources and a letter from an industry group.
Mexican President Claudia Sheinbaum’s administration has authorised a hike in import duties, starting next year, on hundreds of products originating from countries that lack trade agreements with Mexico, a list that includes India and China.
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The car import tariff is due to rise to 50% from 20%, impacting exporters including Volkswagen, Hyundai, Nissan and Maruti Suzuki.
While, the stated aim is to safeguard domestic jobs and manufacturing, the move also comes amid pressure from the US on Mexico to reduce business links with China.
Some Mexican business groups have argued that higher tariffs will push up costs.
India exported goods worth $5.3bn to Mexico in the last fiscal year, with vehicles making up close to $1bn, according to a letter and customs data cited by the news agency.
The same data shows Skoda Auto accounts for nearly half of India’s car exports to Mexico.
Hyundai shipped vehicles worth about $200m, while Nissan’s exports were around $140m and Suzuki’s about $120m.
The Society of Indian Automobile Manufacturers (SIAM) – an industry body whose members include Volkswagen, Hyundai and Suzuki – wrote to India’s commerce ministry in November, asking it to push the Mexican government to keep existing import duty levels unchanged for cars exported from India.
The request was detailed in a letter seen by Reuters.
In its letter to the commerce ministry, sent before the duty increase was approved, the industry association warned that the planned tariff rise would directly affect India’s automobile exports to Mexico and urged the Government of India to step in and open talks with the Mexican authorities.
The higher tariffs may prompt Indian automakers to rethink their plans and operations linked to Mexico, which is India’s third-largest automobile export destination after South Africa and Saudi Arabia.
During meetings with Indian authorities last month, automakers explained that the bulk of vehicles exported from India to Mexico are small, entry-level models equipped with sub-one-litre engines, tailored specifically to Mexican consumer needs and not intended as a conduit for re-export into the US.
They added that Mexico sells about 1.5 million passenger vehicles annually, of which roughly two-thirds are brought in from abroad, and that Indian exports represent approximately 6.7% of those total sales.
In its letter, the industry group added: “Indian-origin vehicles are not a threat to Mexican local industry as Indian vehicles do not cater to high-end segments manufactured by Mexico for serving the North American market.”
India’s commerce ministry, the Society of Indian Automobile Manufacturers and the Mexican government did not reply to comment requests.
Hyundai and Maruti Suzuki also did not respond, while Nissan said it would not comment.
Piyush Arora, managing director and CEO of Volkswagen’s Indian unit Skoda Auto Volkswagen, said India has been an export base for many years and that the company ships to more than 40 nations from the country.
