logo
US tariff may impact Indian autoparts exporters by up to Rs 4,500 cr: ICRA

US tariff may impact Indian autoparts exporters by up to Rs 4,500 cr: ICRA

Indian auto component exporters could suffer an earnings impact in the range of Rs 2,700-4,500 crore following the recent imposition of steep US tariffs on key automotive parts, credit rating agency ICRA said in a note on Monday.
While domestic demand continues to account for the lion's share of revenues, the new 25 per cent tariff on items like engines, transmissions, and electrical components is expected to moderate the auto component industry's overall revenue growth to 6-8 per cent in FY26, down from the earlier projection of 8-10 per cent.
The United States, which accounted for around 8 per cent of the Indian auto component industry's revenues in FY24, recently imposed a 25 per cent import duty effective no later than May 3, 2025. About 65 per cent of India's auto component export basket is estimated to fall under this tariff regime. Prior to this, a 25 per cent tariff on steel and aluminium content in auto parts had already been implemented in March 2025.
ICRA estimates that if Indian exporters are forced to absorb 30-50 per cent of the additional costs, the potential earnings impact could be 3-6 per cent of the auto component industry's operating profits and a steeper 10-15 per cent for exporters alone. Consequently, operating margins could moderate by 50-100 basis points (bps) across the industry, and by 150-250 bps for exporters specifically, in FY26.
"While the auto component suppliers with whom ICRA has interacted indicate that most of the incremental costs would be passed on, the extent of pass-through would depend on factors such as the supplier's criticality, share of business, competition, and the technological intensity of the components supplied," said Shamsher Dewan, senior vice-president and head of corporate ratings at ICRA.
Despite the expected pressures, debt metrics and liquidity are likely to remain comfortable for most exporters, the agency said. Exporters with manufacturing operations within the US would also be partly insulated from the new tariffs.
ICRA pointed out that switching suppliers in the auto component industry typically involves high costs and long product development and approval cycles, suggesting that the loss of business from US customers is unlikely in the near term. Moreover, Indian suppliers may eventually benefit from cost competitiveness vis-à-vis Chinese counterparts if tariffs on Chinese products persist, Dewan noted.
Indian auto component exports to the US had grown at a compound annual growth rate of 15 per cent between FY20 and FY24, driven by rising supplies to new platforms amid vendor diversification by global automakers and Tier-I suppliers. However, the new tariffs have introduced fresh uncertainty, alongside other downside risks such as declining US automobile sales and weakness in the replacement market.
Despite the challenges, the Indian auto component industry retains a significant cushion in its domestic market, which contributed over 70 per cent of overall revenues in FY24.
Following the March 26, 2025 order imposing 25 per cent tariffs, a reciprocal 26 per cent tariff on US exports to India was announced but temporarily paused for 90 days, though a 10 per cent ad valorem duty remains in place. Products covered under the US-Mexico-Canada Agreement (USMCA) remain exempt from the new duties.
Industry executives also flagged the possibility of price pressures building in other export geographies such as Europe and Asia, particularly with intensifying Chinese competition.
Component manufacturers are proactively strategising to mitigate adverse impacts. From increased localisation to strategic market diversification, industry leaders are recalibrating operations to maintain resilience in an evolving global trade environment. Leading players such as Kinetic Engineering and Samvardhana Motherson International (SAMIL) are placing strong emphasis on localisation, long-term partnerships, and a cautious yet opportunistic outlook on market diversification.
Ajinkya Firodia, vice-chairman and managing director of Kinetic Engineering, told Business Standard last week that Kinetic is working closely with its global original equipment manufacturer (OEM) customers to assess potential impacts and build long-term solutions. 'Auto programmes typically span seven years, involving extensive prototyping, feasibility studies, validation and testing. This stable structure allows us to plan ahead and mitigate risks effectively,' he said.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

‘Resume direct flights, reduce hotel tariffs to revive tourism in Kashmir'
‘Resume direct flights, reduce hotel tariffs to revive tourism in Kashmir'

Time of India

time18 minutes ago

  • Time of India

‘Resume direct flights, reduce hotel tariffs to revive tourism in Kashmir'

Srinagar: The travel trade industry has appealed to airlines to resume flights to Srinagar that were discontinued after the Pahalgam terror attack on April 22 so that tourism in Kashmir can revive. Tired of too many ads? go ad free now While all flights to Srinagar, Jammu and over two dozen other areas were suspended in May, as India conducted air strikes against terror hubs in Pakistan, some services including direct flights from Kolkata to Srinagar by IndiGo Airlines and Air India Express have not resumed after hostilities ceased on May 10. IndiGo has indicated that it will resume the direct flight from June 16. Last month, TOI wrote about the 'Chalo Kashmir' campaign, a strong community-tourism industry connect initiative launched by the Travel Agents' Association of India (TAAI), which handles around 4 lakh tourists from Kolkata in a year, around 40,000 of whom travel to Kashmir. Taking the campaign forward, TAAI started a new campaign called Rally for Valley to boost tourism in Kashmir. "We are in talks with the Union govt as well as airlines and hotel bodies to put a cap on tariffs that can help us shape attractive packages for tourists," said TAAI president Sunil Kumar. "As for safety, we are visiting the valley with our families. Tourists have nothing to fear. People here are among the most hospitable. This is the best time to visit the Valley," he added. Over 15 lakh tourists visited Kashmir last year. The Valley was packed with tourists again this year before the terror attack triggered mass cancellations. The downturn in tourists has hit Kashmiris hard. "In April, we were charging Rs 5,000 for a round trip to Pahalgam from Srinagar. Now we are taking tourists even for Rs 3,000," said Md Rouf, a driver. Restaurants like Lazeez, which had to turn down guests two months back, are now giving special offers to fill tables. Tired of too many ads? go ad free now "Very few rooms have been booked across several hotels. Had it not been for the terror attacks, these hotels would have been packed. These hotels should take a Covid-time-like approach and cut down on tariffs. We have set ourselves a target until Sept this year by when we intend to revive tourism back in Kashmir," said TAAI chairman (east) Anjani Dhanuka. The newly inaugurated Vande Bharat Express, travelling through the landmark Chenab Bridge, is also being promoted as a game changer. "Kolkata will host the first roadshow promoting Kashmir as a safe destination. We are also regularly updating our social media handles with snippets and current activities in popular destinations in Srinagar, Pahalgam, Jammu, Gulmarg, Sonmarg, and other places to encourage tourists from Kolkata," said Manav Soni, TAAI national committee member.

Relief for Gali: HC suspends conviction, grants him bail in illegal mining case
Relief for Gali: HC suspends conviction, grants him bail in illegal mining case

Time of India

time18 minutes ago

  • Time of India

Relief for Gali: HC suspends conviction, grants him bail in illegal mining case

Hyderabad: Telangana high court Wednesday suspended both the conviction and sentence of Karnataka former minister and mining baron Gali Janardhan Reddy in an illegal mining case while also giving him bail, an order that would save Gali's position as an MLA. Following the conviction and seven-year sentence imposed by a special CBI court, Gali stood disqualified as an MLA and the election authorities would have held a bypoll soon for his seat (Gangavathi). Agreeing with the arguments of the legislator's lawyer, senior counsel S Nagamuthun, that damages from the conviction were irreversible, Justice K Lakshman also ordered his release from jail with certain conditions. Gali was told not to leave the country or commit unlawful acts anywhere and to furnish two sureties worth Rs 10 lakh. He has already served half of the seven-year sentence while being a remand prisoner. Along with Gali, three other individuals – BV Srinivas Reddy (Obulapuram Mining Company MD), VD Rajagopal (former director, AP mines and geology department) and Mehfuz Ali Khan (PA to Gali) – and one entity, the company OMC, were convicted by the special CBI court last month. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Amazon's Hottest Selling Hearing Aid Is Back On Sale Oricle Hearing Aid Learn More Undo On Tuesday, apart from Gali, Justice Lakshman stayed the conviction of the entity OMC. The judge also granted bail to the other three with the same conditions. The criminal appeals of these three against their conviction will be heard on Aug 11. Srilakshmi issue to be heard on June 19 The judge also sought a counter from the CBI in the criminal revision plea filed by senior IAS officer and former AP industries secretary Y Srilakshmi and posted her case to June 19. The HC had earlier discharged her from the case but the CBI had appealed in the Supreme Court, which directed the HC to hear the CBI version also before arriving at a conclusion. On Tuesday, senior counsel P Venugopal, appearing for Srilakshmi, said she has an apprehension about Justice Lakshman hearing her revision plea in view of last year's judgment delivered by him where he had refused to quash the case against her. When CBI counsel Srinivas Kapatia sought a week's time to file their counter, the judge reminded him that the CBI could not dodge filing a counter now, saying, "You complained to the apex court about the HC not hearing your version. But here you have not filed your counter despite a three-month deadline fixed by the Supreme Court asking the HC to decide the issue." Srilakshmi had succeeded Kripanandam as industries secretary. The special court, while convicting Gali and the others, had acquitted Kripanandam as well as then industry minister Sabitha Indra Reddy in the illegal mining case.

Centre reduces basic custom duty on major imported crude edible oils from 20% to 10%
Centre reduces basic custom duty on major imported crude edible oils from 20% to 10%

India Gazette

time34 minutes ago

  • India Gazette

Centre reduces basic custom duty on major imported crude edible oils from 20% to 10%

New Delhi [India], June 11 (ANI): The central government on Wednesday reduced Basic Custom duty (BCD) on major imported crude edible oils from 20 per cent to 10 per cent. The Ministry of Consumer Affairs, Food and Public Distribution said in a release that the Centre has reduced the Basic Customs Duty on crude edible oils - crude sunflower, soybean, and palm oils - has been reduced from 20% to 10% resulting in the import duty differential between crude and refined edible oils from 8.75% to 19.25%. This adjustment aims to address the escalating edible oil prices resulting from the September 2024 duty hike and concurrent increases in international market prices. An advisory has been issued to edible oil associations and industry stakeholders to ensure that the full benefit of the reduced duty is passed on to consumers, the release said. It said 19.25 % duty differential between crude and refined oils will help to encourage domestic refining capacity utilization and reduce imports of refined oils. By lowering the import duty on crude oils, the government aims to reduce the landed cost and retail prices of edible oils, providing relief to consumers and helping to cool overall inflation. The reduced duty will also encourage domestic refining and maintain fair compensation for farmers. The revised duty structure will discourage the import of refined palmolein and redirect demand towards crude edible oils especially crude palm oil, thereby strengthening and revitalizing the domestic refining sector. 'This significant policy intervention not only ensures a level playing field for domestic refiners but also contributes to the stabilization of edible oil prices for Indian consumers,' a release said. A meeting with leading Edible Oil Industry Associations and industry was held under the Chairmanship of Secretary, Department of Food and Public Distribution, and advisory was issued to them to pass on the benefits from this duty reduction on to consumers. Industry stakeholders are expected to adjust the Price to Distributors (PTD) and the Maximum Retail Price (MRP) in accordance with the lower landed costs with immediate effect. The Associations have been requested to advise their members to implement immediate price reductions and share the updated brand-wise MRP sheets with the Department on a weekly basis. DFPD shared the format with edible oil industry for sharing the reduced MRP and PTD data. 'The timely transmission of this benefit to the supply chain is imperative to ensure that consumers experience a corresponding decrease in retail prices,' the release said. This decision comes after a detailed review of the sharp rise in edible oil prices following last year's duty hike. The increase led to significant inflationary pressure on consumers, with retail edible oil prices soaring and contributing to rising food inflation. (ANI)

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store