Indian auto component manufacturers are expected to face limited repercussions from the 25 percent tariff imposed by the US on automobile imports and select components, according to a Crisil Intelligence report. The analysis underscores the relatively small exposure of Indian component makers to the US market, which accounts for just 4.2 percent of their annual revenue. This figure is projected to decline further to 3.5 percent when considering components subject to tariffs, effectively shielding the revenue of domestic manufacturers.
The tariffs, announced by the Donald Trump Administration, aim to protect US industries, supply chains, and national security. Effective April 3, the new measures will apply to imports of passenger vehicles and light trucks, with additional tariffs on components such as engines, transmissions, powertrain parts, and electricals set to take effect by May 3, 2025.
India’s automotive production exports stand at 15 percent overall, with passenger vehicles and commercial vehicles accounting for 15 percent and 8 percent, respectively. However, the US share in these exports remains minimal, at 0.21 percent for passenger vehicles and 3 percent for commercial vehicles. The majority of Indian exports in these categories are directed toward markets in the Middle East, Africa, and Latin America, including Saudi Arabia, UAE, South Africa, Mexico, and Chile.
The report highlights the absence of major US automakers with manufacturing bases in India following the exit of General Motors and Ford. This lack of presence further diminishes the impact of tariffs on Indian original equipment manufacturers (OEMs). Crisil notes that the tariffs imposed by the US will have minimal consequences for Indian OEMs due to the negligible share of exports to the US.
While India’s auto component exports to the US are more significant, accounting for 28 percent of total exports, the composition of these exports reveals a concentration in specific categories. Powertrain parts, transmissions, engines, and electricals collectively represent 84 percent of all automotive component exports to the US. Despite this, the report suggests that increased prices in the US could reduce the competitiveness of Indian component makers, potentially benefiting Mexico and Canada. These countries, covered under the US-Mexico-Canada Agreement (USMCA), account for 46 percent of overall US imports.
The Crisil report emphasizes that the limited exposure of Indian auto component manufacturers to the US market will mitigate the impact of tariffs on their revenue. However, it also acknowledges the potential challenges posed by reduced competitiveness and increased costs in the US market. As India navigates these trade dynamics, the report highlights the importance of exploring alternative markets and strengthening domestic capabilities to sustain growth in the automotive sector.
