Canada and Mexico Can Absorb Nearly 63% of India’s Exports Headed to the US

Canada and Mexico together can absorb nearly two-thirds of India’s exports currently headed to the US, giving New Delhi a potentially large alternative market as exporters look to diversify away from dependence on the world’s biggest economy.

Commodity-level trade data shows that the two North American markets could potentially accommodate about $58 billion worth of Indian goods currently exported to the US. India’s overall exports to the US stood at $91.2 billion, making the potential market in Canada and Mexico equivalent to about 63.5% of those shipments.

How the $58 Billion Figure Was Calculated

The analysis compares India’s exports of each commodity to the US with Canada and Mexico’s imports of the same product from countries other than India.

The calculation is conservative by design:

• If India exports $100 million of a product to the US but Canada and Mexico together import only $40 million of that product from non-Indian suppliers, the potential diversion is counted as $40 million
• If their non-India imports of the same product are $150 million, the calculation is capped at India’s $100 million of US-bound exports

The numbers indicate the size of the addressable market, not exports that can automatically be redirected.

Which Export Categories Have the Largest Opportunity in Canada and Mexico?

The opportunity spans both labour-intensive and engineering exports:

In automobile parts, Canada and Mexico source nearly $9.7 billion from countries other than India, against India’s US-bound exports of about $608 million, suggesting a large headroom for Indian suppliers to expand.

What Trade Agreements Is India Pursuing With Canada and Mexico?

New Delhi is actively working to deepen trade ties with both countries:

• India and Canada formally launched negotiations for a Comprehensive Economic Partnership Agreement after signing the Terms of Reference in New Delhi on March 2, during Canadian Prime Minister Mark Carney’s visit. Both sides have set a target of concluding negotiations by the end of 2026
• India and Mexico may sign the Terms of Reference for a proposed preferential trade agreement in early October, Moneycontrol reported

What Limits India’s Ability to Capture the Full North American Opportunity?

Canada and Mexico together imported about $1.2 trillion worth of products in 2025, while their imports from India were only around $14.84 billion. The gap between total import capacity and actual Indian exports points to both the scale of the opportunity and the difficulty of capturing it.

Import capacity does not automatically translate into demand for Indian goods. Competition from existing suppliers, logistics costs, product standards, and trade agreement terms will all shape how much of the $58 billion addressable market India can realistically access.

Final Outlook

Source: Moneycontrol