Indian Auto Component Sector Faces New US Tariff Challenge and Plans Diversification

New Delhi, Aug 8 (KNN) India’s auto component sector, with a turnover of $80.2 billion in FY 2025—exports of $22.9 billion and a trade surplus exceeding $450 million—is facing fresh headwinds following the U.S. government’s latest tariff escalation.

On August 6, 2025, the U.S. announced an additional 25% tariff on Indian imports, raising the total import duty to 50% effective August 27. This follows a 25% tariff imposed earlier in May 2025. 

The Automotive Component Manufacturers Association of India (ACMA) has voiced concern, calling this move a short-term setback that highlights the need for stronger competitiveness, greater value addition, and wider global outreach.

ACMA President Shradha Suri Marwah described the development as a wake-up call: “The recent decision by the US to impose higher tariffs underscores the shifting landscape of global trade. While it presents headwinds in the short term, it reinforces the importance of building self-reliance and accelerating innovation in the sector”, reported ET. 

Saurabh Agarwal, Automotive Tax Leader at EY India, added that while not all component categories will be impacted by the extra tariffs, the cumulative 50% duty is altering export dynamics.

He suggested Indian manufacturers explore relocating some production to North American hubs like Mexico and Canada, which benefit from tariff-free access under USMCA, and diversify exports through trade pacts with the UK, EU, and high-growth markets in Asia, Africa, and Latin America.

Despite the challenge, ACMA reaffirmed its commitment to work with the government and industry to safeguard the sector’s global position.

(KNN Bureau)