Indian Auto Component Makers Eye Gains After US Tariff Cut

At the beginning of the current financial year, Indian manufacturers exporting to the USA received a rude shock when US President Donald Trump slapped a 25 per cent ‘reciprocal tariff’ on India-made goods under his global tariff campaign. Before the same year ends, President Trump’s latest announcement of a reduction in tariff, from 50 per cent (25 per cent ‘reciprocal tariff’ + 25 per cent punitive tariff for purchasing Russian oil) to 18 per cent, may bring “relief” to exporters here. 

The $80 billion Indian auto component industry, for which USA is “one of the most important export destinations”, stands to be a major gainer once the revised tariff comes into force, and without any unfavourable fineprint. 

While the possible effect on trade due to the tariff revision is quite obvious, Sudartshan Venu, Chairman, TVS Motor counts the intent behind the latest development as equally crucial, also for stronger ties. “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,” he said.

“This landmark India–US trade agreement marks a defining moment for the Indian economy and the Indian auto components industry in specific, unlocking an exciting new era of export-led growth, deeper market access and global integration,” said Ravi Mehra, MD, Uno Minda, one of the three biggest Indian auto component companies. 

The latest development could make Indian companies who had scaled down exports to USA after the reciprocal tariff was imposed to relook at that market now, according to R K Behera, Chairman, RSB Group, a ₹3,000 crore tier I supplier, which also exports components to USA.

The revised US tariff may also nudge some Indian companies to devise new strategies for the US market. 

This agreement strengthens India’s position in the global supply chain and gives companies like Bharat Forge the confidence to expand engagement across automotive, aerospace, and defence. The growth outlook is clearly positive, and we see this as a strong foundation for the next phase of our global expansion,” said Baba Kalyani, CMD, Bharat Forge.

“This (Indo-US trade agreement) opens up compelling opportunities to further scale our (Uno Minda’s) footprint, strengthen supply-chain agility and expand our contribution to the US market—while proudly reinforcing India’s position as a world-class manufacturing hub”, said Mehra.

The Indian auto component industry exports to the USA has been witnessing an upward trend over the past years. It earned $6.2 bn in FY25 from exports to the USA, up from $3.5 billion four years ago, according to industry body Automotive Components Association of India (ACMA). For the first half of the current year, Indian auto component manufacturers exported goods worth $3.1 billion to the USA.

““The proposed reduction in reciprocal tariffs to 18 per cent, is a positive step that will enhance the competitiveness of Indian automotive components in the US market. At a time when global supply chains are undergoing structural realignments, this development provides greater predictability and confidence for long-term trade and investment decisions,” says Vikrampati Singhania, President, ACMA, and Vice-Chairman and MD, JK Fenner (India).

Counting USA, also the world’s second largest car market, as a crucial export market for Indian manufacturers, Singhania adds that a “more balanced and facilitative trade framework” will also strengthen industrial collaboration, and promote technology-led partnerships across areas like advanced manufacturing, electrification, electronics, and clean mobility solutions.