New Delhi. A bad news has come for the Indian Auto Component Industry. The new tariff imposed by the US can kill up to Rs 4,500 crore on the profits of Indian exporters. This concern is not only limited to traders, but it can also affect employment, investment and India’s dream of ‘Make in India’.
According to the rating agency ICRA, the US exporters’ operating profit will fall by 10-15 per cent by imposing 25 per cent of acce on major products such as engine, powertrain and electrical components. The benefit of the entire industry can have an impact of 3-6 percent. In FY2026, the revenue growth rate is expected to be reduced to 6-8 percent, which was 8–10 percent earlier.
However, Moneycontrol wrote in a report that US President Donald Trump has signed some relief orders to reduce the impact of auto tariffs. By doing this, American car manufacturers will get temporary discounts. Trump took this step during his Michigan tour, where 25% new tariffs are going to be implemented. Although it brought some relief, the industry and foreign partners have expressed concern over the ongoing uncertainty about the trade policy. A potential foreign trade agreement and 90 days tariff ban made some improvement in the stock market, but companies are still worried.
Even though the domestic market is the mainstay of India auto industry, America is a major export destination of Indian auto parts. The total revenue of 46 big exporters in Finance 2024 was more than Rs 3 lakh crore, of which the US stake was 8 per cent. In the last five years, exports here had increased at the rate of 15 per cent annually.
Who will bear additional expenses?
The new fee will cost an additional burden of Rs 9,000 crore on the entire supply chain. According to ICRA, exporters will try to put it on customers, but their bargain strength, product needs and market competition will decide it. If Indian companies had to bear 30-50 percent of the expenditure on their own, then their profit can shrink up to 1.5-2.5 percent.
What is the expectation of relief?
- Companies with manufacturing unit in America will be exempted from fees.
- Imports from China are also imposed high tariffs, which can provide competitive benefits to Indian exporters.
- Some companies are also getting interrogation of new orders from American buyers.
Now what next?
These fees, which have been implemented from May 3, 2025, will affect India’s 65 percent auto component exports. Earlier in March 2025, the US also imposed a 25 percent fee on steel and aluminum parts. In response, India has announced a 26 percent fee on American cars, although it has been stopped for 90 days.
