The minister said some auto parts exports will attract zero duty, while others will face an 18% tariff.
07 Feb 2026 | 582 Views | By Kiran Murali
Following the announcement of an interim trade agreement between India and the United States, Commerce and Industry Minister Piyush Goyal said on Saturday that some elementary auto part exports from India to the US will attract zero duty, with more than half of India’s auto component exports set to fall ...
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Following the announcement of an interim trade agreement between India and the United States, Commerce and Industry Minister Piyush Goyal said on Saturday that some elementary auto part exports from India to the US will attract zero duty, with more than half of India’s auto component exports set to fall under the duty-free category.
“Some auto parts exports will attract zero duty, while others will face an 18% tariff. Around 50% of exports will be duty-free,” Goyal said on Saturday while explaining the framework of the interim trade agreement, which reduces reciprocal tariffs on Indian goods exported to the US imports to 18% and zero percent for certain products, from 50%.
The interim framework provides for preferential treatment for Indian automotive parts entering the US market. According to a joint statement issued by both countries, India will receive a preferential tariff-rate quota for automotive parts under existing US national security rules.
“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,” the joint statement said.
Auto component exports from India to the US currently attract tariffs of around 25%. About 55% of these exports, mainly passenger vehicle parts, were covered under Section 232 tariffs imposed on national security grounds. Commercial vehicle and off-highway parts were later hit by additional reciprocal tariffs that pushed duties as high as 50% in some cases. However, a clarification issued on November 1 rolled back these higher rates, bringing all Indian auto component exports to the US under a uniform tariff of 25%.
The Indian auto component industry has been under pressure due to limited export growth to the US amid these tariffs. The sector recorded a trade deficit of $200 million in the first half of FY26, largely because exports to the US remained flat while shipments to other major regions grew.
Industry revenue stood at $41.2 billion during April–September 2025, marking a 3.5% year-on-year increase. Exports rose 9.3% to $12.1 billion during the period, while imports grew faster at 12.5% to $12.3 billion. Imports from China also rose sharply.
Data from industry body ACMA showed that India’s auto component exports to the US were valued at $3.12 billion in April–September 2025, compared with $3.10 billion in the same period a year earlier. In FY25, component exports to the US stood at $6.22 billion.
“For the Indian auto component industry, the commitment to preferential tariff-rate quotas for automotive parts, removal of Section 232 tariffs on select inputs, and a pathway for further tariff rationalisation under the proposed Bilateral Trade Agreement are indeed positive steps,” said ACMA President Vikrampati Singhania.
Beyond automotive parts, the interim framework also includes tariff changes across a wider range of goods. The US has agreed to apply a reciprocal tariff rate of 18% on Indian exports such as textiles, leather and footwear, plastics, rubber products, organic chemicals, home décor, artisanal items, and certain machinery, down from the earlier level of up to 50%.
India, in turn, has agreed to reduce or eliminate tariffs on selected US industrial and agricultural products, including animal feed, tree nuts, fruits, soybean oil, wine, and spirits. The two countries said the interim arrangement would serve as a step toward a broader US-India bilateral trade agreement and would include cooperation on rules of origin, standards, and regulatory procedures, as well as expanded engagement in technology and digital trade.