Indian auto stocks in the red today: What's the reason?
What's the story
The recent approval of higher tariffs by Mexico's Senate on imported goods has sent shockwaves through India's auto sector. The new duties, which come into effect from January 1, 2026, cover some 1,400 products from countries without a free trade agreement with Mexico. The Nifty Auto index fell over 1% to 27,477.85 today as investors assessed the potential impact of these tariffs on Indian exporters, and companies heavily reliant on exports to Mexico.
Tariff details
Tariff range and product coverage
The new tariffs, ranging from 5% to as much as 50%, cover a wide range of products. These include automobiles, auto components, steel, aluminum, textiles and plastics. According to JM Financial, India's exports to Mexico were $5.7 billion in FY25, 1.3% of the country's total exports, making it the 21st-largest export destination for India.
Export impact
Auto sector's significant export share to Mexico
The auto and auto components sector alone accounted for a whopping 33.8% of India's exports to Mexico in FY25. This concentration has made traders wary of auto stocks as they reassess the sector's exposure to Mexican demand and trade policy risk. Firms like Bharat Forge, Mahindra & Mahindra, and Eicher Motors saw their shares fall by up to 2% amid these concerns.
Market analysis
Mexico's role in India's auto exports
JM Financial's strategy report highlights that Mexico has been the second-largest destination for India's auto and auto component exports. In FY25, shipments to this country were worth $1.9 billion, 8.6% of the segment's total exports. This heavy reliance on Mexican markets puts Indian auto exporters at risk from higher tariffs on vehicles and parts, that could hurt margins and volumes for firms connected to Mexican and North American supply chains.