Mumbai: The latest tariff measures by the US administration will not have any material impact on India’s passenger vehicle exports due to the meagre volumes of such shipments, ICRA said on Thursday.
As part of reciprocal tariffs on about 60 countries to counter higher duties on American products imposed globally, US President Donald Trump on Wednesday announced 27 percent reciprocal tariffs on India, saying New Delhi imposes high import duties on American goods.
The automobile sector is not covered in this order since it is already subject to Section 232 tariffs at 25 percent, announced by the Trump administration on March 26, 2025. The increased tariffs will apply to all passenger vehicles (sedans, sports utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks imported into the US.
However, existing concerns remain. While India’s automobile exports to the US are negligible, the country is a significant destination of Indian-made auto parts. India is estimated to export about $6.8 billion in auto parts to North America, as per the Automotive Component Manufacturers Association of India (ACMA). The bulk of these shipments go to the US.
The 25% levy on auto parts that kicks in from 3 May could prove to be a dampener for Indian exporters. However, given the tariff is uniform across countries, trade is unlikely to shift from India to elsewhere immediately.
Trade relationships in the auto industry also tend to be sticky. It is not easy for an automaker to switch parts suppliers on short notice, given the complexity of their supply chains and the time it takes to validate and bring on board new suppliers.
A larger concern for the Indian industry is that in due course, larger suppliers of auto parts such as China may shift their exports elsewhere from the US, including to India, potentially eating into the business of domestic parts suppliers.
Similarly, India’s steel and aluminium imports to the US are negligible, too, but concerns over China redirecting its excess production to India has the industry worried.
Meanwhile, American automakers are lobbying for an exemption on tariffs for key parts such as engines, Bloomberg reported. Tesla chief Elon Musk, a staunch ally of US President Trump, said earlier on X that the tariffs would have a significant impact on his electric car company, given that it buys parts from overseas.
