Industry body ACMA calls for enhanced competitiveness and market diversification as United States imposes additional tariffs on Indian auto component imports.
07 Aug 2025 | 2935 Views | By Angitha Suresh
The Automotive Component Manufacturers Association of India (ACMA) responded to new U.S. tariff measures targeting Indian auto component exports, emphasizing the need for enhanced competitiveness and market diversification. The tariffs represent a shift in global trade dynamics that will create near-term challenges for Indian exporters.
ACMA President Shradha Suri ...
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The Automotive Component Manufacturers Association of India (ACMA) responded to new U.S. tariff measures targeting Indian auto component exports, emphasizing the need for enhanced competitiveness and market diversification. The tariffs represent a shift in global trade dynamics that will create near-term challenges for Indian exporters.
ACMA President Shradha Suri Marwah acknowledged the development on August 7, 2025, stating that while the tariffs present headwinds, they underscore the importance of strengthening value addition and exploring new markets.
The association expressed confidence that the strategic trade relationship between India and the U.S. would provide a foundation for continued dialogue and resolution.
The United States represents a significant market for India's auto component industry. In the financial year 2024-25, the U.S. accounted for 27% of India's USD 22.9 billion in auto component exports. The country also represents 7% of India's USD 22.4 billion in auto component imports.
ACMA noted that the Government of India has taken a proactive stance in addressing the tariff issue and expressed hope that bilateral engagement would lead to constructive outcomes. The association emphasized that continued diplomatic efforts between the two countries could help resolve trade tensions.
The tariff announcement has prompted ACMA to reinforce its commitment to building greater self-reliance within India's auto component sector. The organization highlighted the importance of enhancing domestic value addition and accelerating innovation to maintain competitiveness in global markets.
India's auto component industry has shown robust performance in recent years. The sector's combined turnover reached USD 80.2 billion in FY2025, with exports totaling USD 22.9 billion and maintaining a trade surplus of over USD 450 million. The industry's organized sector is dominated by ACMA's membership of over 1,100 manufacturers, who contribute more than 90% of the sector's turnover.
ACMA stated it would work closely with government agencies and industry stakeholders to ensure India's auto component industry remains competitive, resilient, and prepared for future challenges.
The association views the current situation as an opportunity to strengthen domestic capabilities and reduce dependence on specific export markets.
Industry experts have provided varied perspectives on the tariff implications. Saurabh Agarwal, Partner & Automotive Tax Leader at EY India, noted that while a 25% duty has been in effect since May 3, 2025, the additional reciprocal 25% tariff from August 2025 will not apply to the majority of the automotive sector.
However, he emphasized that even the initial 25% duty fundamentally alters the competitive landscape for U.S. exports in the short term.
Agarwal suggested that Indian manufacturers should consider establishing production facilities closer to the United States. He highlighted that countries like Mexico and Canada, through the USMCA trade agreement, allow components to enter the U.S. without additional taxes if they meet local content requirements.
He also pointed to the recent trade agreement with the UK, which provides immediate tax-free access for most auto parts, and advocated for pursuing a trade deal with the European Union.
The EY partner recommended expanding into developing markets in Asia, Africa, and Latin America, while focusing on specialized, high-value components not tied to traditional engines. He characterized the challenge as an opportunity to enhance global competitiveness and achieve sustainable growth.
Aman Naagar, Managing Director of AVIS India, offered a different perspective on the tariff changes. He indicated that the measures are expected to have a mixed impact on the auto sector, potentially offering protection to domestic manufacturers in certain segments while increasing input costs in others, particularly where imports form a key part of the supply chain.
Naagar stated that the mobility services industry, including car rentals and leasing, would continue assessing these changes to ensure cost-efficiency for customers while aligning with regulatory frameworks.