India is actively re-engaging with Canada on a long-paused trade agreement while simultaneously exploring a swift preferential pact with Mexico to protect its exporters from punishing tariffs, a top government official announced on Monday. Commerce Secretary Rajesh Agrawal revealed that the government is assessing the scope of the proposed trade deal with Canada, factoring in the significantly changed global economic landscape since negotiations halted in 2023.
Navigating New Tariffs and Seeking Swift Solutions
Elaborating on a critical challenge, Agrawal detailed Mexico's recent tariff increase on 1,455 products, which targets nations without an existing trade deal with the country. This move threatens Indian exports worth approximately $2 billion, although the initial proposal had a broader coverage of $3.8 billion. To counter this, India is prioritizing a Preferential Trade Agreement (PTA) with Mexico. "We are trying to see what is a good way forward and it is easier to sign a preferential trade agreement instead of a bilateral agreement," Agrawal stated, highlighting the strategy to help Indian exporters avoid steep tariffs of up to 50%.
Major Trade Partnerships in Advanced Stages
The Commerce Secretary provided updates on several other key trade negotiations. He confirmed that talks with New Zealand and the European Union are in advanced stages. Notably, he reiterated that India and the United States are "very close" to finalizing the framework for their proposed bilateral trade pact.
Regarding the complex negotiations with the 27-nation European Union, Agrawal acknowledged they have entered the "most difficult" phase. "We are in the most difficult stage, most difficult issues are on the table...we are trying to ease that out wherever we are finding a fine balance," he told reporters. He confirmed that the EU's Carbon Border Adjustment Mechanism (CBAM), a carbon tax on imports, is definitely part of the ongoing discussions.
Path Forward with Canada
On the resumption of dialogue with Canada, Agrawal indicated a pragmatic approach. With the two nations working to normalize ties after diplomatic strains, the chief negotiators from India and Canada are scheduled to hold discussions this week to chart a way forward for the trade deal. This marks a significant step in reviving economic cooperation that was put on hold.
The government's multi-pronged trade strategy demonstrates a clear focus on securing market access and protecting Indian exports from adverse tariff regimes in a volatile global trading environment.
