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Time of India
7 days ago
- Automotive
- Time of India
Auto parts makers gear up for profit squeeze
What do the new tariffs by the US mean for India's auto component exporters? The math is complicated but the pinch is very real. According to auto analysts and industry experts, 15-20 per cent of India's US-bound auto-component exports could be lost in the short term. The US is India's biggest exporting destination with 27 per cent of auto parts exported there. Which means, says Jitin Makkar, group head & senior VP (corporate ratings) at ICRA, 'around 8 per cent of the Indian auto-component production will be impacted by the increase in tariffs'. According to ACMA auto component exports to the US stood at nearly $7 billion in 2024. Of this, $3.6 billion — which covers parts and components for cars and small trucks — will attract 25 per cent duty. But the real squeal will be in the balance $3-billion worth of exports that are part of a reciprocal tariff of 50 per cent. This would include commercial vehicle parts, construction equipment components, off highway, tractor and farm equipment parts. While large OEMs are already looking at alternative markets, it is the sector mainstay MSME exporters that will hurt most. Take Noble Cast Comp, an aluminium casting manufacturer in Bhosari, that exports 60 per cent of its products to the US. The company's CMD Nitin Bhagwat said US customers were already demanding that they share the tariff burden, which would affect profit margins. Others like R K Industries in Pimpri Chinchwad exports computer numerical control machined components to global auto firms, with 20 per cent 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 R K Industries's operations head Nilesh Khaire. While the effective duty can range anywhere from 25-28 per cent to 45-50 per cent depending on the different slabs, the pinch will differ on the basis of how sticky the product exported 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.' As for the larger exportable parts, Indian auto-component exporters will be at a disadvantage compared to other Asian countries like Japan, Vietnam and Indonesia which face a lower tariff of 15-19 per cent. Component exporters however say a lot will depend upon their individual relationship with US-based buyers. Sipra Engineering MD 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
7 days ago
- Automotive
- Time of India
Auto parts makers gear up for profit squeeze
CHENNAI: What do the new tariffs by the US mean for India's auto component exporters? The math is complicated but the pinch is very real. According to auto analysts and industry experts, 15-20% of India's US-bound auto-component exports could be lost in the short term. The US is India's biggest exporting destination with 27% of auto parts exported there. Which means, says Jitin Makkar, group head & senior VP (corporate ratings) at ICRA, "around 8% of the Indian auto-component production will be impacted by the increase in tariffs". According to ACMA auto component exports to the US stood at nearly $7 billion in 2024. Of this, $3.6 billion - which covers parts and components for cars and small trucks - will attract 25% duty. But the real squeal will be in the balance $3-billion worth of exports that are part of a reciprocal tariff of 50%. This would include commercial vehicle parts, construction equipment components, off highway, tractor and farm equipment parts. While large OEMs are already looking at alternative markets, it is the sector mainstay MSME exporters that will hurt most. Take Noble Cast Comp, an aluminium casting manufacturer in Bhosari, that exports 60% of its products to the US. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Are you ready to conquer a planet? Undo The company's CMD Nitin Bhagwat said US customers were already demanding that they share the tariff burden, which would affect profit margins. Others like R K Industries in Pimpri Chinchwad exports computer numerical control machined components to global auto firms, with 20% 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 R K Industries's operations head Nilesh Khaire. While the effective duty can range anywhere from 25-28% to 45-50% depending on the different slabs, the pinch will differ on the basis of how sticky the product exported 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." As for the larger exportable parts, Indian auto-component exporters will be at a disadvantage compared to other Asian countries like Japan, Vietnam and Indonesia which face a lower tariff of 15-19%. Component exporters however say a lot will depend upon their individual relationship with US-based buyers. Sipra Engineering MD 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." Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
