US Tariffs To Hurt 8% Of India's Auto Parts Production Icra Report Highlights Need To Speed Up Trade Talks

(MENAFN- Live Mint) High US tariffs imposed by the Trump administration are expected to affect around 8% of India's overall auto component output, ratings firm Icra said on Wednesday.

This disruption will put Indian auto component exporters at a relative disadvantage compared to most of their Asian peers who export to the United States, highlighting the urgency of concluding an India-US bilateral trade agreement to provide relief to the exporters, PTI reported, citing the report.

Earlier in July, US President Donald Trump imposed an additional 25% tariff on top of an existing 25% tariff, bringing the total tariff to 50% on Indian goods, citing the country's continuous purchase of Russian crude oil.

Tariffs: India at a disadvantage

Auto component exports to America contribute nearly 30% to the sector's revenues, with the US alone accounting for 27% of this share, as per the PTI report.

"As a result, close to 8 per cent of India's overall auto component production is expected to be directly affected by the recently announced tariffs," Icra noted.

The imposition of a 50% tariff on Indian goods places Indian auto component exporters at a disadvantage compared to their Asian counterparts, including China, Japan, Vietnam, and Indonesia who face lower tariffs of 15–30%, it pointed out.

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Additionally, manufacturers in Mexico and Canada have a competitive edge in the US market as these countries have been exempted from tariffs under the United States-Mexico-Canada Agreement (USMCA), further intensifying pressure on Indian exporters, it added.

Indian auto parts exports to US

Auto component export from India rose from $4.1 billion in FY2021 to $6 billion in FY2022. Later in FY2023, it jumped to $6.5 billion and then reached $6.8 billion in FY2024. The total exports of these components are estimated to reach $7.3 billion in FY2025, showing steady growth over the years.

Geography-wise, exports comprise 29% of the country's auto component industry, with domestic sales accounting for 56% and replacement demand for 15%, Icra said, as quoted by PTI.

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The regions where India exports the auto components include, Europe which accounts for 30%, the US 27% , Asia 26% , Latin America 3%, and other regions 13%, it added.

After Trump tariffs came into effect on August 7, 2025, India's $111 billion auto component industry has been working and looking at alternative markets as part of a strategy and an agenda, a Mint report said.

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