Tariff Shock: $7 bn India–US auto parts trade braces for big impact

The US’s new tariffs on Indian auto components are set to cause immediate disruption, with analysts and industry experts warning that 15-20% of India’s exports to its largest auto-parts market could be lost in the short term, ToI reported. The US accounts for 27% of India’s auto component exports, meaning around 8% of the country’s total production will be directly affected, said Jitin Makkar, group head and senior vice-president (corporate ratings) at ICRA.

According to the Automotive Component Manufacturers Association (ACMA), exports to the US stood at nearly $7 billion in 2024. Of this, $3.6 billion worth of parts and components for cars and small trucks will now attract a 25% duty. The bigger hit will come from the remaining $3 billion, which includes commercial vehicle parts, construction equipment components, off-highway machinery, and tractor and farm equipment parts, all of which will face a reciprocal tariff of 50%.

Also Read: Samvardhana Motherson sees no material impact from US tariffs

While larger original equipment manufacturers are already exploring alternative markets, the impact will be most severe for small and medium-sized enterprises (SMEs) that make up the bulk of the sector. Noble Cast Comp, an aluminium casting manufacturer in Bhosari, sends 60% of its products to the US. Its chairman and managing director, Nitin Bhagwat, said American customers were already asking the company to share the tariff burden, which would squeeze profit margins.

In Pimpri Chinchwad, R K Industries exports computer numerical control machined components to global auto firms, with 20% of its shipments going to the US. “Effects are expected to be felt from next month, with US customers likely seeking price reductions due to increased landing costs and clients may also explore alternative suppliers from countries with lower costs,” said the company’s operations head, Nilesh Khaire.

Live Events

The effective duty rates will range from 25-28% to 45-50%, depending on the product category, and the extent of the impact will vary based on how essential the exported component is. Ravindra Patki, managing partner at Vector Consulting Group, said, “30-40% of India’s auto component exports to the US comes from programmes in which India is one of multiple approved suppliers with a defined share of business.”For larger exportable parts, Indian suppliers will be at a disadvantage compared with exporters from countries such as Japan, Vietnam and Indonesia, which face lower tariffs of 15-19%.Component makers say much will depend on their individual ties with US buyers. Sipra Engineering managing director M Umadi said, “US customers, accounting for 28-32% of exports, have assured support if we maintain cost, quality and delivery standards, but may request cost reductions later.”(with ToI inputs)

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}