The US is set to impose 25% tariffs on auto imports, including components, from several countries, including China, Canada, and Mexico. While the specifics for India remain unclear, industry leaders are urging the country to take proactive steps to mitigate the impact.
“This is forcing all countries, including India, to re-evaluate their policies,” said Rajeev Chaba, CEO Emeritus of JSW MG Motor India. “There is a huge opportunity for us to take a clean-sheet approach, study the situation, and insulate ourselves from its impact.”
The new tariffs are expected to rattle supply chains worldwide. India, which is deeply integrated into the global automotive supply network, will not remain unaffected.
“What Donald Trump is trying to do is disrupt and, in some cases, destroy certain supply chains,” Chaba noted. “No one country produces all auto components. Many child parts are imported from the US, then assembled and re-exported. This entire value chain is now under scrutiny.”
While India does not export a significant number of finished vehicles to the US, the auto component sector is vulnerable. India exports about $6.9 billion worth of auto components to the US, making it the country’s largest market for such products.
“As of now, we do not know the exact HS codes affected,” said Pankaj Chadha, Chairman of EEPC India. “But there will be an impact. The steel industry already took a $5 billion hit, and now auto components are next in line.”
With reciprocal tariffs expected, India needs to carefully strategise its response. Industry leaders are calling for a balanced approach that promotes job creation and ensures fair trade between India and the US.
“In the passenger car segment, India’s exports to the US are minimal,” said Venkatram Mamillapalle, MD of Renault India. “But the component industry is well-established and was expected to grow. Now, we have to assess how trade negotiations play out.”
The US imported $474 billion worth of automotive products in 2024, with Mexico, South Korea, Japan, Canada, and Germany being the top suppliers. India, though a relatively smaller player in vehicle exports, stands to lose if auto component tariffs disrupt its supply chains.
Chaba remains optimistic that India can turn this challenge into an opportunity. “This could be a great chance for Indian suppliers and the government to step up,” he said. “A well-thought-out ‘Make in India’ strategy can help optimise tariffs and introduce non-tariff barriers to support local manufacturers.”
Below are the excerpts of the discussion.
Q: We do not export any cars to the US at this juncture. However, considering that this announcement would affect not just cars manufactured around the world but also automotive parts and components, there will likely be a disruption in supply chains globally. Do you feel that, in the mid- to near-term, there will be an indirect impact on the Indian automotive industry?
Chaba: What Donald Trump is trying to do is disrupt and, in some cases, destroy certain supply chains. Whether it results in disruption or destruction depends on each country’s position. India will certainly be affected by this disruption because the automotive industry is highly complex, with extensive global linkages and supply chains.
No single country produces all the components and sub-components. What the US government is currently considering is not only a tariff on cars but also on automotive parts, and they are analysing the level of localisation. A significant amount of sub-component imports come from the US, which are then assembled into final components in India before being re-exported to the US. This means the entire concept of value addition will be scrutinised.
It is still too early to make definitive conclusions, as we need to see the detailed policies. However, in my opinion, within three to six months, a clearer pattern will emerge. This situation is compelling all countries, including India, to re-examine their own policies. There is a substantial opportunity for us to take a clean-sheet approach, assess the situation thoroughly, and insulate ourselves from the potential impact.
Q: At Renault, have you begun analysing the impact of these 25% tariffs on automotive imports into the US? From the 2nd of April, it is quite possible that the average tariff rates imposed by the US on India may also increase, as Trump intends to apply reciprocal tariffs on all countries. There may be additional tariffs beyond those already announced. How are you preparing for the tariff impact? Do you foresee price increases in the automotive industry?
Mamillapalle: In the passenger car segment, at least from India, we do not export significant volumes to the US. However, the auto component industry is well-established. Although its revenue contribution is currently not large, it was expected to grow substantially in the coming years. With these tariffs in place, it is uncertain how the trade balance between India and the US will evolve, despite ongoing discussions between the two countries.
It is essential for us to focus on domestic job creation and carefully balance the tariff structures between the US and India.
Q: At the EEPC, have you been able to quantify the potential setback to the automotive component industry? India is positioning itself as a major supplier to the world, and for companies such as Bharat Forge, Sona Comstar, and Samvardhana Motherson, the US is a crucial revenue generator. Have you conducted any assessment of the impact these tariffs will have?
Chadha: As of now, the official proclamation has not been released. Although the policy has been signed, the specific details, including the Harmonised System (HS) codes affected by these tariffs, are still unclear. While a broad outline has been provided, we need access to the HS codes to conduct a precise assessment.
In general terms, the US is the largest market for Indian auto component exports, amounting to $6.9 billion. Not all of these exports will be affected, but a portion will be impacted. Once the official proclamation and detailed policy are available, we will perform an HS code-based analysis to quantify the exact impact. However, it is certain that there will be a significant effect.
On the 12th of March, we faced an impact of $5 billion due to steel tariffs, and now we are bracing for similar consequences on auto components. In terms of finished vehicles, the supply from India is minimal, so I am not particularly concerned about that segment. However, the auto components sector is a definite cause for concern.
Q: If I were to ask for an overall assessment—considering Trump’s previous actions with China, Canada, and Mexico, where he imposed a broad 25% tariff on all imports—he is likely to implement a similar measure for India. On the 2nd of April, he cannot apply reciprocal tariffs on a product-to-product basis; instead, he will announce a blanket tariff for Indian imports. Has any assessment of this potential action been conducted?
Chaba: India’s export of finished vehicles to the US is minimal—limited to a few motorcycles and some Completely Knocked Down (CKD) kits, to the best of my knowledge. There will be some impact on those segments, but as far as the broader Indian automotive economy is concerned, the impact on finished goods will be minimal.
However, the situation is different for automotive parts, where we may experience greater repercussions. That said, I view this as an excellent opportunity for our part suppliers and the Indian government. This could be the right moment to implement measures that support the ‘Make in India’ initiative, optimise tariffs, and establish non-tariff barriers where appropriate. It is an opportunity to refine and improve our systems to strengthen domestic manufacturing and reduce external dependencies.
Watch the video for more
Discover more from News Hub
Subscribe to get the latest posts sent to your email.
