Key Points
US tariffs exempt no nations on auto parts
India exports 30% components to US
Car exports unaffected at $10M
Labor-intensive sector may gain
Speaking exclusively to ANI, Ajai Sahai, Director General and CEO of FIEO, said car exports to the US are insignificant, so it won't have much impact on Indian automakers.
"Let's look at the numbers. In car exports, the United States is barely a blip on India's radar. Out of India's USD 6.8 billion car export in 2024, the US accounts for less than USD 10 million - that's less than 0.13 per cent of our car exports," said Sahai.
However, the auto components sector tells a different story. Approximately 30 per cent of India's auto component exports go to the United States. With the new 25 per cent tariff affecting all countries, even those who were previously enjoying zero-duty access, India finds itself in an advantageous position.
"We are quite competitive in the auto components sector, which is also labor-intensive. This tariff might actually divert business towards India," added Sahai Every affected country is reacting based on its own interests. Take Canada and Mexico, for instance. More than half of their total production goes to the US, so this duty will significantly impact them. They're likely considering reciprocal tariffs.
"But for India, we have nothing to worry about in the automobile sector. In fact, for auto parts and components, I personally believe India will emerge as a gainer," Sahai said.
President Trump has signed a proclamation implementing a 25 per cent tariff on auto imports, effective April 2nd.
This tariff covers fully assembled cars and key automobile parts, including engines, transmissions, powertrain parts, and electrical components. The President has described these tariffs as "permanent" and has shown no interest in negotiating any exceptions.
Ajay Sahai said that as the global trade dynamics continue to shift, India's auto components sector is poised to benefit from these unexpected market changes potentially.
