Indian two-wheeler makers turn to local assembly to blunt Mexico tariff hike

Subscribe to enjoy similar stories. NEW DELHI : India’s top two-wheeler makers, Bajaj Auto Ltd, TVS Motor Company Ltd and Hero MotoCorp Ltd, say deeper localization and flexible manufacturing will help them blunt the impact of higher tariffs in Mexico, India’s largest two-wheeler export market by value. Senior management at the three listed companies assured investors that exports to Mexico would not face material disruption, citing local assembly arrangements and the ability to shift production across geographies if required.

Mexico imposed a tariff hike in December on imports from countries without a free trade agreement (FTA), including India. The duty on imported two-wheelers has risen to around 35%, from an earlier range of 15–20%, with the higher levies coming into effect from 1 January. In FY25, Mexico was India’s largest two-wheeler export destination by value at $390 million, a year-on-year growth of 39%, accounting for 12% of the country’s total $3.2 billion two-wheeler exports.

However, the trend reversed in the first half of the current financial year, with exports to Mexico falling 30% to $147 million, as demand slowed even before the tariffs took effect. To mitigate tariff exposure, companies can export completely knocked down (CKD) kits, which are then assembled locally. Investment in local assembly can attract significantly lower duties—around 5% in Bajaj Auto’s case—compared with tariffs on fully built imports.

Industry executives say this local-assembly playbook is not limited to two-wheelers. It could also gain traction among carmakers facing the prospect of sharply higher tariffs in key export markets such as Mexico and South Africa. While Mexico has already imposed duties of up to 50%, South Africa