India-US Trade Deal Brings Reciprocal Tariffs Down to 18%: Here’s How India Auto Inc Reacted

India and the United States of America signed a new trade deal which effectively brings down the reciprocal tariffs on products manufactured in India and exported to the USA from 50 percent to 18 percent. This development was confirmed by the Prime Minister of India, Narendra Modi, on his X profile.

“Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” said Modi. This is perceived to have a positive effect on the auto and components industries in India where the US is one of the biggest consumers. 

India paid the highest tariffs in the world after Trump raised import duties on Indian goods from 25% to 50% in August last year. This signalled worrying signs for the Indian auto and component industries. Lower tariffs could support steady order inflows from global OEMs, enhance profitability, and reinforce India’s standing as a cost-competitive manufacturing hub. 

Several Indian auto and auto ancillary companies have significant exposure to the US market, which makes them sensitive to changes in global demand and trade policies. Sona BLW leads the group with around 40 per cent exposure, followed by Ramkrishna Forging at 27 per cent and Bharat Forge at 25 per cent. 

Tata Motors derives nearly 23 per cent of its revenues from the US, while Samvardhana Motherson and Balkrishna Tyres each have about 18 per cent exposure. Sanmar/Sansera Engineering has roughly 9 per cent exposure, whereas Apollo Tyres has a relatively modest US exposure of around 3 per cent. The industry has started to share its first reactions on this historic trade deal.

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India Auto Inc Reacts

“The Mahindra Group welcomes the India–US trade deal, which marks a significant step forward in strengthening bilateral trade and investment ties. The immediate reduction in reciprocal tariffs on Indian exports from 50% to 18%, along with the commitment to progressively lower tariff and non-tariff barriers, will boost growth momentum and improve the predictability businesses need to invest with confidence.With the Indian economy on a strong growth trajectory, this deal adds meaningful momentum to India’s growth ambitions,” said, Anish Shah, Group CEO & Managing Director, Mahindra Group.

“The reduction in the US reciprocal tariff on Indian goods to 18% is a positive step that improves export competitiveness and reinforces confidence in long-term bilateral economic ties, furthering the Hon’ble PM’s vision of Viksit Bharat 2047. Equally important is the intent on both sides to progressively lower tariffs and non-tariff barriers, which can deepen supply-chain integration, enable faster technology collaboration, and attract investment into advanced manufacturing,” said, Sudarshan Venu, Chairman, TVS Motor Company.