The Indian auto component industry is currently performing a delicate balancing act on the global stage. While the sector celebrated a record turnover of Rs 7.6 lakh crore ($85.9 billion) for the fiscal year ending March 2026 (a 12.7% growth), it is simultaneously entangled in high-stakes trade investigations in its largest export market: the United States.
The USA currently absorbs 26% of India’s auto component exports, valued at approximately $7.3 billion. However, this vital trade artery is being constricted by Section 301 investigations conducted by the Office of the U.S. Trade Representative (USTR). The probe is twofold, focusing on allegations of unfair labour practices and excess capacity fueled by government subsidies.
Vinnie Mehta, Director General of the Automotive Component Manufacturers Association (ACMA), visited Washington in April 2026 to present testimonies in the Indian auto component industry's defense. He is expected to return this month to further the industry’s case.
"Essentially, the investigations are two," Mehta explained during the industry’s annual performance review press confrence on Tuesday. "The first investigation is on labour... they allege that we are mistreating our labor... The second one is on overcapacity which is a result of government subsidy."
Mehta has been direct in his refutation of these claims. Regarding labour, he noted that the Indian auto component sector is highly organized, strictly adhering to national labour codes, and emphasized that child labour is non-existent in such a technical field.
On the issue of subsidies, Mehta pointed to a glaring lack of government handouts. "The auto component industry does not get any subsidy from the government... if we had overcapacity then we would not be investing in more capacity," he argued, noting that only two out of 1,100 ACMA members have received disbursements under the government’s Production Linked Incentive (PLI) scheme.
Navigating the "China-Free" Mandate
The nuance of the U.S. investigation is inextricably linked to the broader geopolitical effort to de-risk global supply chains from China. Ironically, while the U.S. investigates India, it is also pushing its Tier-1 suppliers (the large companies that sell directly to vehicle makers) to source more from India, provided those parts are "China-free".
Mehta revealed that some Indian companies are receiving Requests for Quotations (RFQs) from U.S. and European firms with explicit conditions. "The RFQs very clearly state that while you may be a Tier-1 and making in India, please certify that nothing in your supply chain has come from China," Mehta said.
This presents a paradox for India. While seeking to be the global "China+1" alternative, India itself remains heavily reliant on Chinese imports, which account for 36% of its total component intake. This reliance, particularly in the burgeoning Electric Vehicle (EV) vertical where localization is low, contributed to India swinging back into a trade deficit of $1.37 billion this year.
Tariff Pressures and Resilience
The financial stakes are immediate. Half of India’s current exports to the U.S. are already hit with 25% tariffs, while the other half faces 12.5%. The exports currently facing the 12.5% tariff are under investigation pursuant to Section 301.
Despite these global headwinds, the industry has shown remarkable resilience. Exports to North America remained consistent through the last quarter, and exports to Europe actually grew by 9%, even amid a depressing economic sentiment in that region.
ACMA, MD, Vikrampati Singhania remains cautiously optimistic, citing the infrastructure boost and India's general positioning in global trade as medium-term tailwinds. However, he cautioned that the industry cannot take its eyes off the ball, particularly regarding volatile raw material prices and localized labour shortage across Indian industrial belts.
The Way Forward
As Mehta prepares for his next round of meetings with the USTR, the industry’s message is clear: India is a reliable, market-driven partner that is investing in its own growth, not relying on state-sponsored gluts.