India and the United States have reached a framework for an interim trade agreement, under which the US will grant a preferential tariff-rate quote for automotive parts imported from India. Under the framework, the US will also reduce its tariffs on Indian imports on a wide range of products to 18% from the existing 50%.

“Consistent with US national security requirements, India will receive a preferential tariff rate quota for automotive parts subject to the tariff imposed to eliminate threats to national security found in Proclamation 9888 of May 17, 2019 (Adjusting Imports of Automobiles and Automobile Parts Into the United States), as amended,” both countries said in a joint statement.

Auto component exports from India to the US now carry a tariff of around 25%. About 55% of India’s auto component exports to the US, mainly car parts, were covered under Section 232 tariffs. While commercial vehicle and off-highway parts were hit by additional reciprocal tariffs that pushed duties as high as 50% in some cases, a clarification issued on November 1 rolled these higher rates back, bringing all these categories under a single 25%, which is now applied uniformly to Indian auto component exports to the US.

India’s auto component industry recorded a trade deficit of US$200 million during the first half of FY26, primarily due to the absence of growth in exports to the US amid tariffs, while all other major regions saw growth in exports. Imports from China also grew significantly during the period. The industry clocked US$41.2 billion in revenue during April–September 2025, a growth of 3.5% year-on-year. Exports rose 9.3% to US$12.1 billion, while imports into India rose at a faster rate of 12.5% to US$12.3 billion.

Data from ACMA shows that India’s component exports to the US were at US$3.12 billion in April–September 2025, compared to US$3.10 billion in the year-ago period. 

Under the terms of the interim framework, India would reduce or eliminate tariffs on a range of US industrial goods and agricultural products, including dried distillers’ grains, animal feed sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.

The joint statement from both countries said the US has agreed to apply a reciprocal tariff rate of 18% on Indian goods such as textiles, leather and footwear, plastics, rubber products, organic chemicals, home décor, artisanal items and certain machinery. If the interim agreement is finalised, the tariff could be removed on other items identified in a potential tariff adjustments annex.

A spokesperson for  Belrise Industries Ltd 

“The India–USA trade deal is a positive development for the manufacturing and automotive ecosystem. The Indian automotive industry has significant exposure to the US market. Belrise supplies components to more than 38 OEMs, including leading players that are major exporters to the US, making us an indirect exporter and positioning us to see a positive impact on our business. The agreement creates stronger market access and improves demand visibility for Indian auto component manufacturers. With this deal, US OEMs are likely to once again deepen their engagement with Indian suppliers and increase sourcing from India, further strengthening our position as a reliable and competitive partner in global automotive supply chains.”

Pranav Bansal, MD & CEO, Bansal Wire Industries

 "The recent de-escalation in India-US trade relations, particularly the reduction of reciprocal tariffs to 18%, marks a pivotal shift for high-precision manufacturing. For Bansal Wire Industries, this isn't just about global trade it’s about enhancing the competitiveness of the Indian automotive value chain on a global stage.

With our newly expanded 6.18 lakh MTPA capacity at Dadri, we have doubled down on specialty automotive products like Induction Hardened and Tempered (IHT) wires and Steel Tyre Cords. These are critical, high-performance components for vehicle suspensions and radial tyres. Previously, steep duties acted as a barrier for Indian engineering to penetrate the US market at scale. Now, with a more favorable tariff regime, our 'Make in India' products, manufactured at global standards, become a formidable alternative for US OEMs looking to diversify their supply chains.

We see this as a dual opportunity: first, to grow our direct exports of specialty wires; and second, to support our domestic auto-component partners as they expand their footprint in the American market. By lowering the cost of doing business, this trade framework allows us to leverage our technical R&D and scale to move from being a regional leader to a mission-critical partner in the global mobility ecosystem."

Vivek Vikram Singh, MD and Group CEO at Sona Comstar

Remarked that the India–U.S. interim trade framework is a game changer for Indian auto component exports to the U.S. and maybe has made India the most competitive exporter to the USA.

Recent tariff actions had raised duties on Indian auto components to 25–50%, depending on the components being covered under section 232 or not. Under the proposed framework, these tariffs reduce to 18% or potentially 0%, depending on classification.

This represents a 25–32% reduction in tariffs.

With nearly 30% of Sona Comstar’s revenue derived from the U.S., the impact is directly measurable: improved cost competitiveness, stronger pricing flexibility with OEM customers, and a structurally more attractive growth environment for our U.S. business.