ACMA Welcomes India-EU FTA as Strategic Step for Auto Components Sector

The Automotive Component Manufacturers Association of India (ACMA) has welcomed the signing of the India-European Union Free Trade Agreement, describing it as a significant milestone for strengthening India's integration with global automotive value chains.

The agreement was signed following negotiations between Prime Minister Narendra Modi and European Union leadership, marking a historic development in bilateral trade relations between the two regions.

The European Union represents India's largest trading partner for goods and accounts for nearly 30 percent of India's auto component exports. Trade in auto components between the two regions has remained broadly balanced, reflecting complementary strengths.

Industry Impact and Opportunities

Vikrampati Singhania, President of ACMA and Vice Chairman & Managing Director of JK Fenner (India), characterized the FTA as "a timely and strategic step" that could unlock new opportunities for the sector.

"For the auto-components industry, it has the potential to unlock new opportunities for exports, technology partnerships, and investment-led growth," Singhania said. "As global OEMs and suppliers look to build resilient supply chains, a well-balanced and pragmatic FTA can position India as a reliable manufacturing and sourcing partner for Europe."

The agreement is expected to create a framework for resilient and diversified supply chains at a time when global manufacturing networks are undergoing major realignments. For India's auto component industry, ACMA anticipates the deal will facilitate deeper technology collaboration and enable European companies to leverage India's automotive market, currently the world's third largest.

Implementation Considerations

ACMA emphasized that a calibrated approach on several key areas will be critical to fully realizing the agreement's potential. The association highlighted tariffs, regulatory standards, and sustainability-related issues, including the Carbon Border Adjustment Mechanism (CBAM), as important considerations.

"The Association looks forward to working closely with the Government of India and European stakeholders to ensure smooth implementation and meaningful outcomes for the automotive ecosystem on both sides," the statement noted.

Industry Context

ACMA represents over 1,100 auto component manufacturers that contribute more than 90 percent of India's organized auto component sector turnover. In fiscal year 2025, the combined turnover of the auto component industry reached $80.2 billion, with exports totaling $22.9 billion and a trade surplus of $500 million.

The signing of the India-EU FTA follows years of discussions between the two trading blocs and represents one of India's most significant trade agreements with a major economic region. The timeline for full implementation and the specific provisions regarding tariff reductions and regulatory harmonization are expected to be detailed in the coming months.