Indian Auto Sector Smalls Opportunity With Likely Change In US Trade Policy

New Delhi, Jan 7 (KNN) Indian automotive component manufacturers are positioning themselves to expand their presence in the U.S. market, anticipating potential shifts in trade dynamics following President-elect Donald Trump's campaign promises of substantial tariffs on Chinese imports. 

Trump's proposed 60 percent tariff on Chinese products could significantly impact China's automotive exports to the U.S., which are currently routed primarily through Mexico.

Industry leaders are actively pursuing strategic initiatives to capitalise on these potential market changes. Indian manufacturers are strengthening relationships with U.S.-based Tier-1 suppliers and vehicle manufacturers, while simultaneously exploring expansion options through their Mexican facilities and considering acquisitions in European markets experiencing financial stress. 

According to a senior executive from a leading Indian auto component manufacturer, the industry's response will largely be shaped by customer demands, potentially necessitating capacity expansion in either the U.S. or Mexico.

The U.S. market holds particular significance for India's automotive component sector, representing 33 percent of total exports. Recent data shows promising growth, with exports to the U.S. reaching USD 3.67 billion in H1FY25, marking a 9 percent year-on-year increase. 

However, as ACMA Director General Vinnie Mehta notes, India's current share of the U.S. auto components market stands at merely 2 percent of the country's annual imports of over USD 300 billion, indicating substantial room for growth.

Several Indian manufacturers have already established international operations to serve the U.S. market. Companies like JK Tyre, Samvardhana Motherson, Sona Comstar, Uno Minda, and RSB Group maintain facilities in Mexico, while Bharat Forge, Anand Group, and Samvardhana Motherson operate plants within the United States. 

Sunjay Kapur, chairman of Sona Comstar, views the evolving China+1 or India+1 strategy as a significant opportunity for Indian manufacturing, citing benefits already visible in supply chain relocations to India.

(KNN Bureau)