US Tariffs To Hit 8% Of India's Auto Component Output: Report

High US tariffs are expected to affect close to 8% of India's overall auto component production, ratings firm ICRA said on Wednesday.

Indian auto component exporters are at a relative disadvantage compared to most other Asian exporting nations, highlighting the importance of concluding an India-US bilateral trade agreement, it added.

Auto component exports contribute nearly 30% to the industry's revenues, with the US alone accounting for 27% of this share.

"As a result, close to 8% of India's overall auto component production is expected to be directly affected by the recently announced tariffs," ICRA stated.

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

Further, manufacturers in Mexico and Canada remain exempt under the United States-Mexico-Canada Agreement, further intensifying competitive pressures on Indian exporters, it added.

Exports of auto components from India to the US have been rising steadily, moving from $4.1 billion in FY2021 to $6 billion in FY2022, $6.5 billion in FY2023, $6.8 billion in FY2024, and are estimated to reach $7.3 billion in FY2025.

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.

Within exports, Europe accounts for 30%, the US 27%, Asia 26^, Latin America 3%, and other regions 13%, it added.