Section 232 Tariffs Add Pressure as Auto Component Exporters Seek Clarity

India’s auto component industry is navigating a phase of heightened export uncertainty, with tariff-related disadvantages, particularly in the US, emerging as a key challenge even as domestic market conditions remain supportive.

Speaking on the industry outlook, ACMA President Vikrampati Singhania said that from a domestic perspective, the automotive industry is moving in the right direction. He attributed this to government measures and broader policy support that have strengthened the underlying automotive sector, in turn supporting the auto component industry.

Singhania acknowledged that challenges around exports continue to persist, but said these developments are unfolding in the larger national interest. He expressed confidence that the government’s efforts on multiple bilateral trade agreements would work in favour of the industry as these come through over time.

According to him, discussions and progress around agreements with markets such as the UK and New Zealand, along with other trade engagements, could open newer opportunities going forward.

Tariff Disadvantage under Section 232

While domestic momentum remains positive, export competitiveness, particularly in the US, remains under pressure. Sriram Viji, ACMA President designate, pointed to the impact of Section 232 tariffs, under which an additional 25 percent duty is applicable on auto component exports.

Viji said that some countries have negotiated more favourable treatment under Section 232, placing India at a disadvantage when competing in the US market. He noted that even a tariff differential of 10 percent between countries can lead to significant shifts in trade flows, given the thin margins at which auto component manufacturers operate.

According to Viji, absorbing such tariff differences is extremely difficult for companies, making price competitiveness highly sensitive to tariff outcomes. He said that unless there is either a resolution on the tariff front or at least greater stability and clarity on how the situation will evolve, challenges are likely to persist, particularly with respect to exports to the US.

US Business Uncertain, Supply Chains Steady

Singhania said exports to the US remain somewhat uncertain, especially when it comes to new awards or fresh contracts, which are currently in a state of limbo. However, he noted that existing supply chains are expected to continue, at least for some time.

He explained that automotive supply chains involve stringent qualification and approval processes, making it difficult for OEMs to switch suppliers quickly. As a result, current suppliers are likely to retain business in the near term, even amid tariff-related uncertainty.

Viji echoed this cautious outlook on the US, while noting that other markets are showing more positive signs. Europe, he said, is performing slightly better in the current financial year, providing some support to overall export demand.

Cautious Outlook

Despite export headwinds, Singhania said the Indian auto component industry continues to push itself towards deeper competitiveness in manufacturing. He added that currency movements have helped cushion some of the pressure, though challenges remain.

Striking a note of cautious optimism, Singhania said that while headwinds persist, the overall direction remains positive and the industry is expected to show progress as the year unfolds.