New Delhi, August 2: The 25% tariff hike imposed by the United States on Indian automotive components and tyres has raised alarm across India’s export-driven manufacturing sectors. According to a report by ICRA, the move places Indian exporters at a strategic disadvantage compared to regional competitors such as Japan, Vietnam, and Indonesia, which enjoy lower or preferential tariff rates.
The new tariff regime, effective August 7, affects a significant portion of India’s outbound trade:
The US accounts for 27% of India’s auto component exports. ICRA warns that the increased duties could erode India’s competitiveness, particularly in:
Specialized automotive parts
Off-highway vehicle components
Replacement tyre segments
Previously, Indian tyre exporters held a pricing edge over Chinese counterparts. However, that advantage may now be neutralized by the preferential access granted to Southeast Asian nations.
To mitigate the impact, ICRA recommends:
- Geographic diversification of export markets
- Cost optimization strategies
- Policy-level engagement to negotiate trade relief
Despite the headwinds, India’s auto component industry reported a 10% growth in FY2025, reaching a turnover of $80.2 billion (₹6.73 lakh crore). Exports rose by 8% to $22.9 billion (₹1.92 lakh crore) from the previous year.
Industry stakeholders are urging the government to initiate diplomatic dialogue with the US to address the tariff disparity and safeguard India’s position in global supply chains.
End of Report
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