Schedule a Call Back
Indian auto component industry expects 8-10% growth in FY25: Vinnie Mehta
Interviews- May 28,25
In this interaction with Rakesh Rao, Vinnie Mehta, Director General of Automotive Component Manufacturers Association of India (ACMA), presents his views on the impact of recent global events on Indian auto components industry.
In 2023-24, Indian auto component industry reported a turnover of Rs 6.14 trillion ($ 74.1 billion) - a growth of 9.8 per cent over FY23 - with exports accounting for $ 21.2 billion. While FY25 started on a strong footing, in the second half of FY25 the industry faced headwinds due to multiple factors. In this interaction with Rakesh Rao, Vinnie Mehta, Director General of Automotive Component Manufacturers Association of India (ACMA), presents his views on the industry performance and impact of recent global events on Indian manufacturing sector.
How has the Indian auto component industry performed in FY 2024-25?
The Indian auto component industry has demonstrated resilience despite a challenging year. While some vehicle segments such as passenger and commercial vehicles experienced subdued sales, the two-wheeler and tractor segments performed reasonably well. Based on preliminary assessments, we expect industry growth to be around 8-10 per cent in FY25. Final numbers are yet to be compiled.
The industry recorded 11.3 per cent growth in H1 FY25. Could you comment on that?
Yes, the first half was indeed strong, supported by seasonal factors including the festive season. However, the second half did not sustain the same momentum, especially in commercial vehicles. Exports too faced headwinds due to geopolitical tensions and logistics disruptions around the Red Sea. Despite these challenges, the industry has performed reasonably well.
What impact has the recent US tariff of 25 per cent on auto parts had on the Indian auto component industry?
The tariffs on auto components became effective from 3 May 2025. These are a concern, particularly because competitiveness in global trade is a relative issue. While Chinese auto parts also face a 25 per cent tariff under this announcement, they are further impacted by an additional 20 per cent under the IEEPA provisions, totalling 45 per cent. In contrast, Mexico continues to benefit from zero tariffs under the USMCA (US-Mexico-Canada Agreement).
Our Tier 1 suppliers may face less impact due to a 3.75 per cent rebate vehicle manufacturers receive, but Tier 2 and aftermarket players could face challenges. It is still early to assess the full impact (as the US tariff regime is at this juncture very fluid). We remain hopeful that the Indian Government’s negotiations on a bilateral trade agreement (BTA) with the US will yield favourable terms, ideally under a 0-for-0 tariff model.
India exported $6.79 billion worth of auto components to the US in the last fiscal. How important is the North American market?
North America, including the US, is a very significant market for us. We export nearly $7 billion worth of auto components to North America and a similar value to Europe. These are our two most important export regions.
What is your view on the recently concluded India-UK FTA? How will it impact the auto component industry?
We, at ACMA, support FTAs, including those with the UK, EU, and the US. The India-UK FTA is a step in the right direction. Tariffs on Indian exports to the UK currently range from 0-4 per cent, whereas imports into India from the UK face tariffs of 5 per cent, 7.5 per cent, 10 per cent, or 15 per cent. Under the FTA, some of these tariffs will be phased out, giving UK companies better access to the Indian market.
However, we see this FTA more as a platform for technology access and investment than a direct export benefit, since UK tariffs were already relatively low.
So, the FTA offers the UK greater market access to India than vice versa?
From a purely tariff perspective, yes. But there are other dimensions to FTAs. The FTA can encourage UK companies to invest in India, promote joint ventures, and provide access to advanced technologies.
Can the India-UK FTA serve as a basis for a future agreement with the EU?
Not directly. The UK does not have a very strong auto component base, unlike the EU—particularly Eastern European countries such as Poland, Hungary, and the Czech Republic—which are integral to the German automotive supply chain. Therefore, each FTA must be evaluated on its unique strengths and opportunities. However, establishing such frameworks helps promote global integration and is beneficial for the automotive value chain.
What are the key challenges before Indian auto component industry at present?
Global trade dynamics pose multiple challenges. These include high raw material costs, limited access to rare earth materials, and concerns about dumping of low-cost components from countries like China. Companies must critically analyse their supply chains and address vulnerabilities to remain competitive.
How dependent is the industry on China for raw materials or components?
In FY24, China accounted for approximately 30 per cent of India’s total auto component imports, valued at $20.9 billion. This is driven by China’s immense manufacturing scale and cost competitiveness. However, studies show that within comparable production setups, Indian auto component manufacturing is equally competitive, if not better. Our challenge is scale.
Do you see a risk of dumping from China due to the US-China trade conflict?
The Government of India is alert to this risk. Customs authorities have been advised to monitor imports, and the Commerce Ministry has urged industry bodies to report unusual surges. So far, there is no evidence of dumping in the auto component sector. India has historically been proactive in imposing safeguard and anti-dumping duties where necessary.
Are the Government’s Quality Control Orders (QCOs) causing concerns for the industry?
QCOs are not unjustified; many countries use non-tariff barriers. However, the industry must be given sufficient time to adapt. In several cases, the Government has agreed to defer QCO implementation to allow for localisation or development of alternative sources. The intent is to improve quality, and the industry and the Government must work closely to ensure smooth transitions.
What strategies do you recommend to enhance India's manufacturing competitiveness?
The cost of capital remains a major constraint. While companies in competing countries can borrow at 0–5 per cent, Indian firms pay 8–10 per cent, with SMEs facing even higher rates or no access at all. This restricts investments in R&D and innovation, which are critical for future competitiveness—especially with the global transition towards sustainable mobility and new powertrains.
India must create an ecosystem that encourages investment in R&D and skilling. Our competitiveness will increasingly depend on our ability to develop and deploy cutting-edge technologies. If we do not prioritise innovation now, we risk falling behind.
Overall, the Indian auto component industry is resilient, adaptive, and globally competitive. With appropriate policy support, strategic investments, and global partnerships, it has the potential to become a dominant player in global automotive supply chains.
Indian auto component industry
Vinnie Mehta
Rakesh Rao
Automotive Component Manufacturers Association of India
ACMA
Indian manufacturing sector
India-UK FTA
US Tariff
Indian auto industry
Related Stories
Material Handling Equipment
Why efficient material handling is essential for the success on Make in India
Indian manufacturers need well-managed warehouses amid global disruptions (like tariff wars and geopolitical tensions) to reduce costs and avoid delays. Hence, efficient material handling systems ar..
Read moreAuto & Auto Components
Indian auto component industry expects 8-10% growth in FY25: Vinnie Mehta
In this interaction with Rakesh Rao, Vinnie Mehta, Director General of Automotive Component Manufacturers Association of India (ACMA), presents his views on the impact of recent global events on Ind..
Read morePolicy Regulation
Manufacturing Wins from UK–India Trade Pact
India-UK Free Trade Agreement (FTA) has the potential to boost bilateral trade by over £25 billion annually by 2040. Using Interact Analysis’ manufacturing industry output (MIO) tracker, Jack Lou..
Read moreRelated Products
Tata Motors unveils facilities for development of Hydrogen propulsion tech
AUTO COMPONENTS & ACCESSORIES
Tata Motors, India?s largest automobile company, unveiled two state-of-the-art & new-age R&D facilities for meeting its mission of offering sustainable mobility solutions. The unveilings constitute of Read more
Tata Motors plans petrol powertrain for Harrier and Safari SUVs
AUTO COMPONENTS & ACCESSORIES
Tata Motors is in the process of developing a new petrol powertrain for its premium sports utility vehicles, the Harrier and Safari, as confirmed by a senior company official. Currently, these models Read more
Electric Vehicle Charger
AUTO COMPONENTS & ACCESSORIES
RRT Electro is engaged in manufacturing of customized Power Electronic Products over two decades having capability to Design, Develop, Prototyping, Regulatory Compliance testing & Certification, Manuf Read more
latest News
Subscribe to iNoW
For Industry News on WhatsApp, Give a Miss Call on: +91 84228 74016
