Schedule a Call Back
US auto tariffs to limit impact on Indian industry: Crisil
Industry News- Apr 02,25
While the direct financial impact is small, Indian auto component manufacturers may face a decline in competitiveness due to increased costs for US buyers.
The United States has announced a 25% tariff on automobile and component imports, citing the need to protect its domestic industry, supply chains, and national security. These tariffs will take effect from April 3, 2025, for passenger vehicles (PVs) and light trucks, while tariffs on engines, transmissions, powertrain parts, and electrical components will be implemented by May 3, 2025.
However, imports from Mexico and Canada will be exempt under the United States-Mexico-Canada Agreement (USMCA) until a mechanism is established to apply tariffs only to non-US components.
Minimal impact on Indian auto exports
In FY 2024, India’s PV and commercial vehicle (CV) exports accounted for 15% and 8% of total production, respectively. However, the US market share in these exports was negligible, just 0.21% for PVs and 3% for CVs. The majority of India’s auto exports are directed toward Saudi Arabia, UAE, South Africa, Mexico, and Chile.
Following the exit of General Motors and Ford from India, no major US automaker has a manufacturing base in India for exports to the US. Given the insignificant share of US-bound exports, the impact of the new tariffs on Indian OEMs is expected to be minimal.
Auto component exports face some pressure
India’s auto component exports to the US account for 28% of total component exports, with key segments including:
• Powertrain parts – 40%
• Transmissions – 29%
• Engines – 13%
• Electrical components – 2%
Together, these make up 84% of India’s auto component exports to the US. However, with exports accounting for only 15% of India’s total auto component production, the direct exposure of Indian manufacturers to the US is limited to 4.2% of total production revenue. When adjusted for the specific components affected by tariffs, this exposure is further reduced to just 3.5%, ensuring that the overall revenue impact remains limited.
Competitive implications
While the direct financial impact is small, Indian auto component manufacturers may face a decline in competitiveness due to increased costs for US buyers. This could lead to a shift in demand toward Mexico and Canada, which together account for 46% of US auto imports and will retain tariff exemptions under USMCA.
Overall, while the tariffs could create pricing pressures, India’s low export dependence on the US will help mitigate any major disruptions for domestic manufacturers.
(CRISIL Intelligence)
Related Stories
Gears, Motors & Drives
Igus’ PTFE-free positional system for precise adjustment
Users can adapt the new linear system to their application. The rails are available in lengths of up to 3,000mm and as hard anodised, silver anodised or black anodised versions.
Read moreIndustrial Safety & Security
Igus e-chains receives new dry-cleanroom certificates for battery production
A high degree of cleanliness is essential in semiconductor and battery production. As these technologies have to deliver increasing performance, they are becoming more sensitive.
Read moreMaterial Handling Equipment
Robust investments boosted warehousing & logistics: Vestian
The share of engineering and manufacturing sector increased from 18 per cent in 2023 to 24 per cent in 2024, propelled by various government initiatives such as ‘Production Linked Incentive (PLI)â..
Read moreRelated Products
latest News
Subscribe to iNoW
For Industry News on WhatsApp, Give a Miss Call on: +91 84228 74016
