India Turns to Canada and Mexico to Diversify Trade Away from US Dependence

Canada and Mexico have the capacity to absorb nearly two-thirds of India's exports currently headed to the US, providing New Delhi with a potentially large alternative market as exporters look to diversify away from their dependence on the world's biggest economy.

A Moneycontrol analysis of commodity-level trade data shows that Canada and Mexico could potentially accommodate about $58 billion worth of Indian goods currently exported to the US. This would allow India to reduce its reliance on the US market, which is a key goal for New Delhi as it seeks to diversify its trade relationships.

New Delhi is seeking to deepen trade ties with both countries, with negotiations underway for a Comprehensive Economic Partnership Agreement (CEPA) between India and Canada. The two sides have set a target of concluding the negotiations by the end of 2026. Additionally, India and Mexico are also considering signing a preferential trade agreement.

India's desire to diversify its trade relationships is driven by concerns about the impact of US tariffs and trade policies on its economy. By expanding its trade ties with other countries, India aims to reduce its vulnerability to fluctuations in the global market.