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Exports

India's Auto Component Exports Face Challenges from High US Tariffs

Strategic Insights

— 2 min read

India's auto component industry is highly dependent on exports, with auto component exports contributing nearly 30 percent to the industry's revenues. The US is the largest market for Indian auto component exports, accounting for 27 percent of this share. However, the imposition of high tariffs by the US government poses a significant challenge to Indian auto component exporters. According to a report by ICRA, high US tariffs are expected to affect close to 8 percent of India's overall auto component production, making it essential for India to conclude a bilateral trade agreement with the US.

Key Takeaways:

  • Auto component exports contribute nearly 30 percent to the industry's revenues in India.
  • The US alone accounts for 27 percent of India's auto component exports.
  • High US tariffs are expected to affect close to 8 percent of India's overall auto component production.
  • Indian auto component exporters are at a relative disadvantage compared to most other Asian exporting nations.
  • The imposition of a 50 percent tariff on Indian goods places Indian auto component exporters at a disadvantage compared to their Asian counterparts.
  • Countries such as China, Japan, Vietnam, and Indonesia face lower tariffs of 15-30 percent.
  • Manufacturers in Mexico and Canada are exempt from US tariffs under the United States-Mexico-Canada Agreement (USMCA).
  • Exports of auto components from India to the US have been rising steadily, moving from $4.1 billion in FY2021 to $7.3 billion in FY2025.
  • Geography-wise, exports comprise 29 percent of the country's auto component industry, with domestic sales accounting for 56 percent and replacement demand for 15 percent.
  • Within exports, Europe accounts for 30 percent, the US 27 percent, Asia 26 percent, Latin America 3 percent, and other regions 13 percent.

Statistics:

  • Auto components exports contribute nearly 30 percent to the industry's revenues in India. (Source: ICRA report)
  • The US alone accounts for 27 percent of India's auto component exports. (Source: ICRA report)
  • High US tariffs are expected to affect close to 8 percent of India's overall auto component production. (Source: ICRA report)
  • Exports of auto components from India to the US have been rising steadily, moving from $4.1 billion in FY2021 to $7.3 billion in FY2025. (Source: ICRA report)
  • Geography-wise, exports comprise 29 percent of the country's auto component industry, with domestic sales accounting for 56 percent and replacement demand for 15 percent. (Source: ICRA report)

Sources:

  • ICRA report, "Impact of High US Tariffs on Indian Auto Component Exports"

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