The new US automotive import tariffs will create difficulties for India’s auto component sector because President Donald Trump announced a single 25% duty. The new tariff has the potential to increase expenses for Indian producers of powertrains and engine components and transmission systems which are essential elements in India’s $6.79 billion exports to the US in FY24.
The new tariff creates concerns among industry experts because Indian suppliers have traditionally kept lower prices than Chinese and European competitors but the new duty may reduce US automaker demand. The study conducted by ACMA and BCG demonstrated that Indian components offered price advantages of 20-25% compared to Chinese alternatives sold in the US market.
The potential tariff exemptions for Mexico and China have raised concerns because they could create an unfavorable market position for Indian exporters. The major price-lowering risk stems from China’s unclear subsidy system yet Washington plans to track such practices.
The auto component industry of India shows resilience despite facing challenges because it generated $21.2 billion in global exports during FY24. Manufacturers will explore different strategies including cost optimization and establishing new supply routes and foreign production sites to reduce the negative effects. The Indian government plans to secure better market access terms during upcoming trade dialogues with the United States.
