Mexico is one of the 15 largest economies of the world that has become increasingly oriented toward manufacturing since the North American Free Trade Agreement (NAFTA) entered into force in 1994.The country has strong macroeconomic institutions, and it is open to trade. Mexico's growth had been muted in the last three decades but the incumbent government has emphasized economic reforms, passing and implementing sweeping energy, financial, fiscal, and telecommunications reform legislation, among others, with the long-term aim to improve competitiveness and economic growth across the economy. The economy grew 4.8 percent in 2021 after contracting by 8.2 percent in 2020.
Mexico is the 11th largest destination for India’s engineering exports at present and 2nd largest in NAFTA region after USA. Engineering exports reached its all-time high at USD 2.75 billion in 2021-22 after being somewhat subdued in the previous two fiscals due to the Pandemic. Engineering imports from Mexico however declined to USD 181.99 million from 280.7 million in 2019-20. Total engineering trade between India and Mexico reached almost USD 3 billion in 2021-22. India enjoys substantial engineering trade surplus of around USD 2.5 billion with Mexico as on 2021-22.
The top ten engineering product groups exported to Mexico from India are Motor Vehicle/Cars, Auto Components/ Parts, Aluminium, Products of Aluminm, Iron & Steel, Two & Three Wheelers, Industrial Machinery for Dairy etc., Electric Machinery & Equipment, Products of Iron & Steel, Other Miscellaneous Engineering Items, IC Engines & Parts
Once recognized for simple assemble operation, Mexico has with time shaped up as a place for complex manufacturing operations. Proximity to an industrially developed economy like USA, low cost of land and labour and government’s focus on manufacturing has turned Mexico into a country for short to medium-run products that have a high degree of engineered content. Mexico attracts U.S. manufacturers that need low cost solutions near-by for higher value end products and just-in-time components. Mexico has developed expertise in Aerospace engineering, Automobile and auto component, Medical devices, Metal manufacturing among others in engineering segments. Machineries are in high demand because of its well established textile & apparel and consumer product industries. Indian exporters therefore will surely have ample scope to set up or expand their businesses in Mexico.