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  3. High US tariffs likely to affect close to 8% of India's overall auto component production: ICRA

High US tariffs likely to affect close to 8% of India's overall auto component production: ICRA

18 Sep 2025 Evaluate

Ratings firm ICRA in its latest report has said that high US tariffs are expected to affect close to 8 per cent of India's overall auto component production. It said Indian auto component exporters are at a relative disadvantage compared to most other Asian exporting nations, highlighting the importance of concluding an India-US bilateral trade agreement. It noted that auto component exports contribute nearly 30 per cent to the industry's revenues, with the US alone accounting for 27 per cent of this share. 

ICRA pointed out that the imposition of a 50 per cent tariff on Indian goods places Indian auto component exporters at a disadvantage compared to their Asian counterparts, as countries such as China, Japan, Vietnam, and Indonesia face lower tariffs of 15-30 per cent. Further, it said manufacturers in Mexico and Canada remain exempt under the United States-Mexico-Canada Agreement (USMCA), further intensifying competitive pressures on Indian exporters.

According to the report, exports of auto components from India to the US have been rising steadily, moving from $4.1 billion in FY2021 to $6 billion in FY2022, $6.5 billion in FY2023, $6.8 billion in FY2024, and are estimated to reach $7.3 billion in FY2025. It said geography-wise, exports comprise 29 per cent of the country's auto component industry, with domestic sales accounting for 56 per cent and replacement demand for 15 per cent. It added that within exports, Europe accounts for 30 per cent, the US 27 per cent, Asia 26 per cent, Latin America 3 per cent, and other regions 13 per cent.


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