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Time of India
2 days ago
- Automotive
- Time of India
Tariff Shock: $7 bn India–US auto parts trade braces for big impact
The US's new tariffs on Indian auto components are set to cause immediate disruption, with analysts and industry experts warning that 15-20 per cent of India's exports to its largest auto-parts market could be lost in the short term, ToI reported. The US accounts for 27 per cent of India's auto component exports, meaning around 8 per cent of the country's total production will be directly affected, said Jitin Makkar, group head and senior vice-president (corporate ratings) at ICRA . According to the Automotive Component Manufacturers Association (ACMA), exports to the US stood at nearly $7 billion in 2024. Of this, $3.6 billion worth of parts and components for cars and small trucks will now attract a 25 per cent duty. The bigger hit will come from the remaining $3 billion, which includes commercial vehicle parts, construction equipment components, off-highway machinery, and tractor and farm equipment parts, all of which will face a reciprocal tariff of 50 per cent. While larger original equipment manufacturers are already exploring alternative markets, the impact will be most severe for small and medium-sized enterprises (SMEs) that make up the bulk of the sector. Noble Cast Comp, an aluminium casting manufacturer in Bhosari, sends 60 per cent of its products to the US. Its chairman and managing director, Nitin Bhagwat, said American customers were already asking the company to share the tariff burden, which would squeeze profit margins. In Pimpri Chinchwad, R K Industries exports computer numerical control machined components to global auto firms, with 20 per cent of its shipments going to the US. 'Effects are expected to be felt from next month, with US customers likely seeking price reductions due to increased landing costs and clients may also explore alternative suppliers from countries with lower costs,' said the company's operations head, Nilesh Khaire. The effective duty rates will range from 25-28 per cent to 45-50 per cent, depending on the product category, and the extent of the impact will vary based on how essential the exported component is. Ravindra Patki, managing partner at Vector Consulting Group, said, '30-40 per cent of India's auto component exports to the US comes from programmes in which India is one of multiple approved suppliers with a defined share of business.' For larger exportable parts, Indian suppliers will be at a disadvantage compared with exporters from countries such as Japan, Vietnam and Indonesia, which face lower tariffs of 15-19 per cent. Component makers say much will depend on their individual ties with US buyers. Sipra Engineering managing director M Umadi said, 'US customers, accounting for 28-32 per cent of exports, have assured support if we maintain cost, quality and delivery standards, but may request cost reductions later.'
Time of India
2 days ago
- Automotive
- Time of India
Tariff Shock: $7 bn India–US auto parts trade braces for big impact
US tariffs on Indian auto components threaten to disrupt exports, potentially costing India 15-20% of its auto-part exports to the US. SMEs, which form the bulk of the sector, will be severely affected. While larger manufacturers explore alternative markets, smaller firms face pressure from American clients to absorb tariff costs, squeezing profit margins. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The US's new tariffs on Indian auto components are set to cause immediate disruption, with analysts and industry experts warning that 15-20% of India's exports to its largest auto-parts market could be lost in the short term, ToI reported. The US accounts for 27% of India's auto component exports, meaning around 8% of the country's total production will be directly affected, said Jitin Makkar, group head and senior vice-president (corporate ratings) at ICRA According to the Automotive Component Manufacturers Association (ACMA), exports to the US stood at nearly $7 billion in 2024. Of this, $3.6 billion worth of parts and components for cars and small trucks will now attract a 25% duty. The bigger hit will come from the remaining $3 billion, which includes commercial vehicle parts, construction equipment components, off-highway machinery, and tractor and farm equipment parts, all of which will face a reciprocal tariff of 50%.While larger original equipment manufacturers are already exploring alternative markets, the impact will be most severe for small and medium-sized enterprises (SMEs) that make up the bulk of the sector. Noble Cast Comp, an aluminium casting manufacturer in Bhosari, sends 60% of its products to the US. Its chairman and managing director, Nitin Bhagwat, said American customers were already asking the company to share the tariff burden, which would squeeze profit Pimpri Chinchwad, R K Industries exports computer numerical control machined components to global auto firms, with 20% of its shipments going to the US. 'Effects are expected to be felt from next month, with US customers likely seeking price reductions due to increased landing costs and clients may also explore alternative suppliers from countries with lower costs,' said the company's operations head, Nilesh effective duty rates will range from 25-28% to 45-50%, depending on the product category, and the extent of the impact will vary based on how essential the exported component is. Ravindra Patki, managing partner at Vector Consulting Group, said, '30-40% of India's auto component exports to the US comes from programmes in which India is one of multiple approved suppliers with a defined share of business.'For larger exportable parts, Indian suppliers will be at a disadvantage compared with exporters from countries such as Japan, Vietnam and Indonesia, which face lower tariffs of 15-19%.Component makers say much will depend on their individual ties with US buyers. Sipra Engineering managing director M Umadi said, 'US customers, accounting for 28-32% of exports, have assured support if we maintain cost, quality and delivery standards, but may request cost reductions later.'(with ToI inputs)
The Hindu
07-08-2025
- Business
- The Hindu
Exporters to U.S. fear loss of business with 25% additional tariff
The additional 25% tariff announced by the U.S. on exports from India will result in loss of substantial business if the tariff stays, said exporters of engineering and textile products. The U.S. is the top market for several Indian products. Exporters hope the U.S. will withdraw the additional tariff and have called for efforts to continue negotiations between the two countries. While support from the government cannot be a substitute for export orders, the exporters do need financial support from the Union government to overcome the current situation as Indian exporters are in trouble, said an engineering exporter. In 2024-2025, the U.S. accounted for 27% of the $22.9 billion auto components exported from India and 7% of $22.4 billion imports of auto components into India, said Automotive Component Manufacturers Association president Shradha Suri Marwah. 'While this [additional tariff] development presents near term headwinds, for Indian exporters, it also underscores the importance of enhancing our sector's competitiveness, strengthening value addition, and exploring new and diversified markets,' he said. EEPC India chairman Pankaj Chadha said the increase in tariff threatens to derail the ongoing trade talks between the two countries. 'We are hoping for an interim deal,' he said. Engineering exports from India to the U.S. in 2024-2025 were to the tune of nearly $20 billion. Iron and steel products and aluminium, and electrical and industrial machinery are among the major exports. Sudhir Sekhri, chairman of AEPC, said the U.S. is a key market for Indian ready-made garment exports, with the country holding a share of 33% in India's total garment exports in 2024. 'While export of fashion garments will continue as it is not easy for the U.S. buyers to identify alternative suppliers immediately, export of volume products may move out of India if the additional tariff stays. With the initial 25% tariff, some of the U.S. buyers have accepted the shipments and some negotiated for discounts,' said K.M. Subramanian, president of the Tiruppur Exporters Association. Ravi Sam, chairman of the Cotton Textiles Export Promotion Council, urged the government to announce a three-year moratorium on bank loans. Pharma exempted Namit Joshi, chairman, Pharmexcil, said the U.S. decision to temporarily exempt Indian pharma exports from increased tariffs reiterates India's critical role in ensuring affordable, high-quality medicines for the American population. India supplies over 40% of generics used in the U.S. Tariffs on Indian pharma will be counterproductive as any tariff will be passed on to U.S. consumers.
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Business Standard
08-07-2025
- Automotive
- Business Standard
China's rare earth magnet curbs a wake-up call for Indian auto makers: ACMA
The ongoing shortage of rare earth magnets, following China's import ban in April and its subsequent actions, has emerged as a wake-up call for India's auto component industry, said Vinnie Mehta, Director General of the Automotive Component Manufacturers Association (ACMA) on Tuesday. The industry body is now conducting a comprehensive study to map vulnerabilities in its supply chain and identify areas where resilience needs to be built, he added. 'This is a wake-up call… The only solution for us is to be Atmanirbhar. That is where we have to focus all our energies,' Mehta said at a press briefing. He added that inventories are currently cushioning the impact of the disruption, but 'inventories are not infinite.' In 2024-25, India's overall auto component imports rose by 7 per cent year-on-year to $22.4 billion. China remained the largest source of imports, increasing its share from 29 per cent in FY24 to 32 per cent in FY25, ACMA stated. The total size of the Indian auto component industry stood at $80.2 billion in FY25, marking a 9.6 per cent year-on-year growth, supported by increased supplies to automakers, higher exports, and aftermarket demand, ACMA noted. ACMA President Shradha Suri Marwah acknowledged the industry's overdependence on China for rare earth magnets, which are vital yet low-cost components used across electric motors and various automotive systems. Both Marwah and Mehta reiterated the need for rapid localisation of critical components. 'There are no options left… We have to move towards a high percentage of localisation. The government is very clear on this, and so is the industry. We don't want to be stuck in situations like this—either as a country or as an industry,' she mentioned. ACMA will release findings of its supply chain vulnerability study at its annual session on September 12. The theme this year is Managing Geopolitical Challenges and Creating a Resilient Supply Chain, according to Mehta. Marwah mentioned that while the industry is agile and is already working on alternate solutions, the long-term answer lies in building domestic processing capabilities. 'India has the raw materials. We just need the technology to process rare earth minerals, and we'll be able to do it. There's a lot of work happening, and we're hopeful the situation won't be as bad as it seems,' she said. Mehta also addressed the Indian government's ongoing efforts to finalise a trade agreement with the United States. While he praised the Centre's consistent consultations with the industry, he admitted that progress is difficult. 'People on the other side are not so easy—and you get that… We count our blessings that India is not on the list of 14 countries facing trade restrictions. We are hopeful a deal will come through,' he stated. He hinted that any agreement could come in phases. 'I understand that there may be a truncated deal first, followed by a second phase. But I do not have any insights into the contours of the agreement, to be very honest,' he clarified. Meanwhile, Marwah raised concerns over rising freight and logistical challenges driven by global geopolitical conflicts—including the Russia-Ukraine war, Israel-Gaza conflict, and Red Sea tensions. 'Something that took 10 days is now taking 22,' she said, citing delays at Red Sea and Singapore ports. 'When materials take longer, your cash flows get stuck. Planning becomes uncertain. You plan for more material, and that increases costs,' she mentioned. She noted that while smaller components may be air-freighted, it is not always viable. 'It's disruptive… We plan three to six months in advance based on forecasts, and any delay throws things off balance,' she added.
Indian Express
08-07-2025
- Automotive
- Indian Express
‘No visibility' on resolving China rare earth magnet issue, says auto parts industry body ACMA
The Indian auto component industry has 'no visibility' on when it will be able to resume imports of rare earth magnets from China, industry representatives said on Tuesday. The industry, which grew by 9.6 per cent to $80.2 billion in 2024-25, is also facing other geopolitical headwinds, such as potential US tariffs and supply chain disruptions caused by conflicts in the Middle East, they added. 'We're facing challenges on the front of rare earth magnets from China. Again, there is no visibility here as to when we'll be able to resolve this issue,' Vinnie Mehta, director general of the Automotive Component Manufacturers Association (ACMA) of India, said at a press conference. Since April, China has blocked the export of rare earth magnets, key components in traction motors for electric vehicles (EVs), to markets around the world, including India. On whether the industry is facing shortages, Mehta said, 'Nobody has formally come and told us. But yes, we do understand that since April there has been no import of rare earth magnets and the situation can last as long as they have the inventories. And again, the inventories are not infinite.' Shradha Suri Marwah, president of ACMA and chairperson and managing director of Subros Ltd, said the issue needs a government-to-government intervention for a resolution in the near-term. 'We have started work on alternate solutions. We are also very clear that in the long run, we will have a permanent solution to this because India has the raw material. We just need the processing technology,' Suri added. In FY25, India's auto component sector grew by 9.6 per cent to $80.2 billion from $74.1 billion in FY24. The sector has also recorded a compound annual growth rate (CAGR) of 14 per cent since FY20, when it was sized at $49.3 billion. Exports grew by 8 per cent to $22.9 billion, while imports grew by 7.3 per cent to $22.4 billion in the last financial year. Both exports and imports hit a five-year high, compared to $13.3 billion and $13.8 billion, respectively, in FY21. The US remained India's top auto component export destination in FY25, accounting for 27 per cent, followed by Germany (7 per cent) and Thailand (4 per cent). On the import side, China led with a 32 per cent share, trailed by Germany (11 per cent) and Japan (10 per cent). In its outlook for the ongoing financial year, ACMA identified geopolitical challenges and rising freight costs as key headwinds. 'Geopolitics today is very disruptive. We don't know when and where war will strike. It's a dominating sentiment. Tariffs are unstable. With respect to the US, yesterday some (tariffs) have been announced, which cover some countries. Our country's name wasn't there, but nevertheless,' Suri said. With the US being India's largest auto parts export market, any new tariffs could dent demand and hurt domestic exporters. President Donald Trump on Monday said the US is 'close to signing a trade deal' with India, after announcing new reciprocal tariffs on 14 countries — including Bangladesh, Malaysia, Japan, Cambodia and South Korea — setting rates at 25 to 40 per cent. Suri also said maritime trade disruptions are causing longer lead times and tying up cash flows. 'Whether it's on the Red Sea side or the Singapore port, and now with the Iran issue, routes are being redone. For example, what was earlier taking 10 days is now taking 22 days… Localisation is increasing and dependence on global trade is going down for everyone in the value chain. Over the next 3-4 years, it may not be that impactful. But at the moment, it's paining (the industry),' she said. Aggam Walia is a Correspondent at The Indian Express, reporting on power, renewables, and mining. His work unpacks intricate ties between corporations, government, and policy, often relying on documents sourced via the RTI Act. Off the beat, he enjoys running through Delhi's parks and forests, walking to places, and cooking pasta. ... Read More
