Terms of reference for Mexico trade pact likely next month

India's burgeoning economic relationship with Mexico, highlighted by the imminent finalization of Terms of Reference (ToR) for a bilateral trade pact, marks a significant stride in India's global trade diversification strategy. This development is not merely about increasing trade volumes; it's a strategic move to solidify economic diplomacy and enhance India's footprint in Latin America, a region of growing importance for global supply chains and emerging markets.

**Background Context and What Happened:** Historically, India's trade focus has often been concentrated on immediate Asian neighbours, Europe, and North America. However, in recent decades, there has been a conscious effort to 'Look West' and expand engagement with resource-rich and growing economies in Africa and Latin America. Mexico, as the second-largest economy in Latin America and a crucial gateway to the North American market via the USMCA (United States-Mexico-Canada Agreement), presents a compelling partner. The current trade figures underscore this potential: India's exports to Mexico reached a robust $5.75 billion in 2024-25, while imports stood at $2.9 billion, creating a substantial trade surplus for India. Key Indian exports like light vehicles, motorcycles, auto parts, machinery, textiles, and pharmaceuticals indicate India's growing manufacturing and service capabilities, while imports of crude petroleum oil, smartphones, and gold from Mexico highlight complementary economic needs. The finalization of ToR is the preparatory phase before formal negotiations commence, outlining the scope, objectives, and parameters of the prospective trade agreement.

**Key Stakeholders Involved:** The primary driver on the Indian side is the **Ministry of Commerce & Industry**, responsible for formulating and implementing foreign trade policy. They aim to secure better market access for Indian goods and services, promote exports, and attract foreign investment. On the Mexican side, the **Ministry of Economy** plays a similar role, seeking to strengthen economic ties, attract Indian investment, and diversify its own trade partners. **Indian export industries** – particularly the automotive, pharmaceutical, textile, and machinery sectors – are major stakeholders, as they stand to gain significantly from reduced tariffs and non-tariff barriers. Similarly, **Indian consumers** might benefit from a wider array of competitively priced Mexican goods. Beyond direct trade, **logistics and shipping companies** will also be key players, facilitating the increased movement of goods.

**Significance for India:** This trade pact holds multifaceted significance for India. **Economically**, it promises to further boost India's exports, helping achieve the ambitious target of $1 trillion in merchandise exports by 2030. Mexico's strategic location can serve as a manufacturing and export hub for Indian companies targeting the wider North American market, fostering global value chain integration. It aligns with the 'Make in India' and 'Atmanirbhar Bharat' initiatives by encouraging domestic production for international markets. **Strategically and Politically**, strengthening ties with Mexico, a prominent member of the G20 and a key player in Latin America, enhances India's diplomatic leverage and global influence. It diversifies India's trade basket, reducing reliance on a few dominant markets and making India's trade more resilient to global economic fluctuations. Furthermore, it opens avenues for greater cultural exchange and people-to-people connections.

**Historical Context and Broader Themes:** India and Mexico established diplomatic relations in 1950, embodying a shared commitment to developing nations' interests. While political ties have been consistent, economic engagement has seen a significant uptick in the 21st century. India's broader foreign policy underpins this engagement, seeking strategic autonomy and multi-polarity in global affairs. This bilateral pact is part of a larger trend where India is actively pursuing Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries and blocs (e.g., UAE, Australia, UK, EU) to liberalize trade, boost competitiveness, and integrate into the global economy. This aligns with India's commitment to multilateralism, even while pursuing bilateral avenues to secure its economic interests.

**Future Implications:** The successful negotiation of a comprehensive trade pact could lead to increased bilateral trade volumes, expanded investment flows, and potential technology transfer. It would likely involve tariff reductions, simplification of customs procedures, and harmonization of standards, making it easier for businesses to operate. However, challenges may include navigating non-tariff barriers, differing regulatory frameworks, and ensuring equitable benefits for both sides. The pact could also pave the way for deeper cooperation in areas like renewable energy, digital economy, and pharmaceuticals, further cementing India-Mexico relations as a cornerstone of India's 'South-South' cooperation strategy.

**Related Constitutional Articles, Acts, or Policies:** The power of the Indian Parliament to enter into and implement international treaties and agreements is primarily derived from **Article 253 of the Constitution of India**. This article empowers Parliament to make any law for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. The **Foreign Trade (Development and Regulation) Act, 1992**, provides the legal framework for the regulation and promotion of India's foreign trade. Furthermore, the **Foreign Trade Policy (FTP)**, formulated by the Ministry of Commerce & Industry, periodically outlines the government's strategy for international trade and forms the operational backbone for pursuing such pacts. The underlying principles are also guided by India's broader economic diplomacy and foreign policy objectives.