Component exports to the US remain flat in the first half of FY26; the tariff impact is expected to be more significant in the second half.
14 Jan 2026 | 264 Views | By Kiran Murali and Mukul Yudhveer Singh
Amid higher tariffs imposed by the US on exports from India, the auto component industry here remains uncertain about new supply contracts to the US, as many companies in the US and other regions under the North American Free Trade Agreement (NAFTA) have started showing hesitation in making deals for ...
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Amid higher tariffs imposed by the US on exports from India, the auto component industry here remains uncertain about new supply contracts to the US, as many companies in the US and other regions under the North American Free Trade Agreement (NAFTA) have started showing hesitation in making deals for new supplies from companies in India.
The Auto Component Manufacturers Association (ACMA) President Vikrampati Singhania on Wednesday said new contracts from the US are in limbo, while existing supply contracts continue.
“New contracts that are due are a little bit in limbo, whereas existing supply chains continue because a supplier has to go through qualification processes and stringent approval processes. It is not very easy for an OE to switch suppliers,” he said.
Sriram Viji, ACMA president-designate, said that companies in North America are showing hesitation in signing new deals.
“We have seen that the tariff imposed by the US on much of the world, including India, has led to a lot of hesitation from companies in the US and the NAFTA region to source new projects from companies in India.”
Component exports to the US from India now carry a tariff of 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.
Viji also noted that some countries have managed to secure more favourable rates even under the Section 232 tariff regime, leaving India at a disadvantage when competing in those markets.
Even a 10 percentage point gap in tariffs can significantly change trade flows, as profit margins in the auto component industry are thin and companies find it difficult to absorb such higher prices, he said.
“So, unless we see either some resolution on this front, or at least stability and clarity on where things are going, I think there will be some challenges going forward with respect to trade, specifically with respect to the US.”
India’s auto component industry recorded a trade deficit of US$200 million during the first half of FY26. This was 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.
“All are aware of the headwind that we have in exports. Yet, exports did well. But this time, there has been a bad trade deficit compared to the trade surplus that we had last year,” said ACMA Director General Vinnie Mehta.
“I must qualify here that in the first six months, supply to the US has remained the same. It has been very steady. And that is because the impact of Trump tariffs would be felt more in the second half than in the first half.”