US To Reassess Tariff Rate, Extra 25% To Not Impact Our Exports: Ramkrishna Forgings MD

Ramkrishna Forgings Ltd. (RKFL) does not expect the additional 25% punitive tariff by the United States to impact its auto components exports, the company's Managing Director, Naresh Jalan, clarified on Thursday. He also believes that the US will eventually reassess this decision.

Speaking to NDTV Profit, Jalan clarified that all of RKFL's automotive exports fall under the standard 25% tariff, which is applied globally. The extra 25% tariff is not applicable to their products. 

“I can say that all my auto component exports fall under the 25% category and there is no export that falls under the 50% category for auto components. Only forgings, which fall under the 50% category, are non-auto forgings that particularly go to oil and gas. So, that is one sector wherein 50% tariff is applicable…..and that is not today, that is from the day oil, steel and aluminium tariffs were announced…,” he explained.

The MD acknowledged that, though undesirable, the extra 25% punitive tariff from the US is part of doing business. “Tariff is one thing which we had never imagined, but also then it’s part of business and I think it is going to go away. I think we are very hopeful that in the coming months or days, maybe that’s because the US does not have a capacity for forgings as a low-cost country and I think it will sooner or later realise it,” he noted.

Despite the uncertainty, the leading forged components manufacturer has not seen any disruption in new orders or requests for quotations from US clients. However, demand across all vehicle segments: passenger, light commercial, and Class 8 trucks, has softened.

“The overall demand in the US economy is down in terms of passenger vehicles or trucks. The overall demand being down, that's the reason we are seeing less uptick…otherwise, in terms of pulling out business or shifting business and we don't hear or see any incremental news coming out of the US…this I can say for the entire automotive segment. I don't think…..there is an alternative to India in terms of the auto component sector,” the MD highlighted.

Adding to this, he also clarified that RKFL is not planning to diversify its manufacturing base. 

“We are doing well with our customers and have been able to negotiate with most of our customers in terms of pass-through of the tariff. I think we are well on track in terms of our new order wins within North America. So, I don't see that as a challenge. Right now, the biggest challenge we are facing is on the demand side. In terms of tariff, I think it is a cost impact…but it is a cost impact for the customer,” he said.

US President Donald Trump’s additional 25% tariffs, levied on India for buying Russian oil, came into effect on Wednesday. Earlier, a 25% tariff was imposed on India on Aug. 7, as a part of the “reciprocal” tariffs announced by the US on several countries to protect its domestic market.

Ramkrishna Forgings Ltd. shares closed at Rs 575 apiece, up 1.75%, on the NSE on Thursday. In comparison, the benchmark Nifty50 settled 0.85% lower at 24,500.9.