US tariff hike on Indian auto parts prompts industry to diversify and bolster competitiveness: ACMA
Automotive Component Manufacturers Association
of India (
ACMA
) has expressed concern over the United States' decision to impose additional tariffs on Indian imports, including auto components, calling it a near-term challenge for the sector. The move highlights the urgency for Indian manufacturers to enhance competitiveness, deepen value addition, and explore alternative global markets.
On August 6, the US announced a 25 per cent additional tariff on all Indian imports, effective from August 27, taking the total import duty to 50 per cent. This follows an earlier 25 per cent duty imposed in May 2025.
'The recent decision by the US to impose higher tariffs underscores the shifting landscape of
global trade
,' said ACMA President Shradha Suri Marwah. 'While it presents headwinds in the short term, it reinforces the importance of building self-reliance and accelerating innovation in the sector.'
US, an essential market for exports
The US is a key market for Indian auto component exports, accounting for 27 per cent of the ₹1.91 lakh crore ($22.9 billion) exports in FY2025. Imports from the US stood at 7 per cent of the ₹1.87 lakh crore ($22.4 billion) total.
ACMA remains hopeful of a constructive outcome through continued bilateral engagement.
EY India's Automotive Tax Leader Saurabh Agarwal noted that while the additional reciprocal tariffs may not impact most auto components, the existing 25 per cent duty significantly alters the export landscape. He urged Indian firms to consider shifting some production to North American markets like Mexico and Canada, which benefit from tariff-free access under the USMCA agreement.
He also stressed the need to accelerate diversification. 'The new UK trade pact offers immediate duty-free access for most parts. Similar deals with the EU and focus on emerging markets in Asia, Africa and Latin America can open long-term growth avenues,' Agarwal said.
India's auto component sector recorded a turnover of $80.2 billion in FY2025, with exports of $22.9 billion and a trade surplus of over $450 million. ACMA affirmed its commitment to working with the government and industry stakeholders to maintain the sector's global competitiveness and resilience.
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