New Delhi, Jun 20 (KNN) India is actively considering signing a free trade agreement (FTA) with Mexico as a potential avenue to boost its declining engineering goods exports to the United States, government and industry officials have revealed.

The move comes amid concerns over India's dwindling engineering exports to the U.S., which accounts for 20 per cent of the country's total engineering shipments.

Data from the Engineering Export Promotion Council (EEPC) shows that these exports to the U.S. declined by 5.7 per cent year-on-year in 2023-24, even as overall engineering exports grew 2.13 per cent to USD 109.3 billion during the same period.

"Most of the USA's manufacturing has shifted to Mexico, including Tesla's new plant. The only way for India to increase our engineering goods export to the USA is to have an FTA with Mexico," said Pankaj Chadha, Senior Vice Chairman of EEPC, underlining the industry's push for such an agreement.

The council, which represents one-fourth of India's engineering exports, has been vocal about the need to access the U.S. market through Mexico, where several American companies have established manufacturing bases.

Responding to the proposal, Commerce Secretary Sunil Barthwal confirmed the government's willingness to explore the option. "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," he stated while addressing industry representatives in Pune.

Barthwal emphasised that the government is trying to pursue FTAs with "complementary countries" and those with a large number of existing trade agreements, suggesting that Mexico meets these criteria.

Currently, Indian engineering goods face import duties in the U.S., while Mexico has also imposed a 25 per cent import duty on steel imports from April 2024, according to EEPC.

As India seeks to diversify its export markets and bolster its trade ties, the proposed FTA with Mexico could potentially open up new opportunities for the country's engineering sector to tap into the lucrative U.S. market indirectly.

(KNN Bureau)