New Delhi: Indian auto component makers are more likely to be impacted than their vehicle manufacturing counterparts by US President Donald Trump’s tariff war, industry observers said Thursday.
Trump Wednesday announced imposition of 25 per cent tariffs on auto imports from April with another 25 per cent tariffs expected to be applied on imports of major automotive parts — engines and engine parts, transmissions and powertrain parts, and electrical components by May.
“It is the Indian auto components industry that is more likely to face the heat due to the US tariff as exports from here to the US are significant.
“Indian vehicle makers are less likely to be impacted as there are no direct exports of fully built cars from India to the US,” an industry executive told PTI on the condition of anonymity.
According to industry estimates, India’s auto component exports to the US was USD 6.79 billion in FY24, while the country’s imports from the US stood at USD 1.4 billion at 15 per cent duty. Prior to Wednesday’s announcement by Trump, the US charged almost ‘nil’ duty on imported components.
“As of now, engine components, power trains and transmissions are our largest export items,” another industry official said.
JATO Dynamics India President and Director, Ravi G Bhatia said India has not been singled out with Trump’s tariff, which also applies to the country’s competitors.
“This step will hit for sure but it is not a ‘Tsunami’. It is not too much of a big hit and Indian suppliers will work out how to retain their market share in the US,” he said, adding as the situation is developing it is too early to jump into a conclusion.
Bhatia expressed confidence that India’s low cost manufacturing will become even more advantageous as a 25 per cent increase in tariff will only push up vehicle prices in the US.
However, he said the latest move by Trump may make some of the Indian automakers, which were looking for global expansion, including the US market with new products including electric vehicles, have a second thought over their plans.
Automotive Component Manufacturers Association of India (ACMA) and Society of Indian Automobile Manufacturers (SIAM) did not comment on the development.
Another industry executive said some of the leading auto component makers had set up plants in Mexico and Canada to leverage on NAFTA and supply parts to the US.
Among them is the Motherson Group, one of the country’s top auto component makers. Comments from the group could not be immediately obtained.
However, Samvardhana Motherson International Ltd Director Laksh Vaaman Sehgal had in Q3 earnings call noted that Motherson has a globally local strategy with a manufacturing plant in close vicinity to its customers.
“All material flows like commodities are typically passed through and so they are customer nominated parts. Any change in tariff from these parts would have a pass-through effect.
“For the remaining procurement, we work actively to localise and hence the implications, if any, for Motherson will be very limited. Further, as tariffs are an industry-wide issue, these would ultimately be repriced by the customers,” he had noted.
PTI
