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New Indian Express
28-04-2025
- Automotive
- New Indian Express
US tariff: Auto component exporters may take Rs 2,700-4,500 crore hit
The auto component industry may see the topline growth decelerating to 6-8% this fiscal, as against 8-10% projected earlier if higher tariffs get finally imposed on exports to the US. This may shave `2,700-4,500 crore off the industry's net income, says a report. The likely tariff hike is estimated to burden the entire supply chain with an incremental cost of about `9,000 crore, which will need to be borne by the US consumers, US importers, and exporters, Icra Ratings said on Monday in a report based a sample of 46 auto ancillaries with aggregate annual revenue of more than `3,00,000 crore in FY24, which is nearly half the industry size. Operating margins are likely to moderate by 50-100 bps against earlier estimates of 10.5-11.5% this fiscal in a scenario where 30-50% of the incremental costs are to be absorbed. Specifically for exporters, the decline can be higher at 150-250 bps. The agency expects debt metrics and liquidity to remain comfortable for most exporters in its sample set despite potential decline in margins and increase in working capital requirements. The domestic auto component industry demand continues to benefit from a diversified mix of end-user segments and geographies, with over 70% of revenue coming from domestic sales and the US constituted only close to 8% of the total industry revenue in FY24. Exports to the US grew at a compounded annual rate of 15% during FY20-24. According to Shamsher Dewan, senior vice-president at the agency, though most auto component suppliers have indicated that they will pass on most of their incremental cost, if an average of 30-50% of incremental tariff cost is absorbed by the exporters, this will impact the earnings by nearly `2,700-4,500 crore, which is 3-6% of the operating profit of the industry and 10-15% of operating profit of the component exporters. The US has imposed 25% tariff on imported engines, transmission, powertrains, and electrical components from May 3 and about 65% of the domestic auto component export basket is estimated to fall under the 25% import tariff category. Prior to this, a 25% tariff was imposed on imported steel and aluminium contents in auto parts from March 12. Though 26% reciprocal tariffs announced is paused till July 7, there is a 10% ad valorem duty applicable from April 12. This is steep as Indian auto components exports had only 2.5% import duty earlier.
Time of India
23-04-2025
- Business
- Time of India
US tariff moves to have limited impact on Indian banks: Report
India's diversified and low exports will ensure banks in the country have a limited impact of the US tariff moves, a global rating agency said on Wednesday. Moody's Investors Service said its outlook on the Indian banking system remains stable on favourable operating environment driven by government capital expenditure, tax cuts for middle-income groups, and monetary easing to boost consumption. "India's relatively low and more diversified exports to the US are expected to limit the credit impact on its banks," the agency noted. The agency, however, said that banks' asset quality is likely to "deteriorate moderately" after substantial improvements in recent years, due to an increase in stress in unsecured retail loans, microfinance loans, and small business loans. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo Banks' profitability will get impacted when compared with FY25, it said, adding that the impact will be limited as the declines in net interest margins (NIMs) are likely to be gradual. Banks will maintain strong capitalisation, supported by internal capital generation that keeps pace with asset growth and easy access to a deep domestic equity market. Live Events Meanwhile, the agency's unit Icra Ratings said the non-bank lenders' capital position and healthy earnings performance will help them absorb headwinds on loan quality and regulatory developments. The domestic rating agency estimated them to grow by 16-18 per cent in FY26, slower than the rate seen in previous few fiscals. Spillover of stress into secured asset segment remains a key monitorable, it added.
