NEW DELHI: The 25 per cent US tariff on Indian exports places domestic auto component industry and tyre makers in an unfavourable position as compared with Asian peers like Japan, Vietnam, and Indonesia, which face lower duties, rating firm Icra said on Saturday.
The US administration has announced imposition of the tariff on all goods coming from India from August 7.
"Imposition of a 25 per cent tariff by the US on Indian imports has raised concerns across India's automotive and tyre industries, both of which maintain substantial export exposure to the US market," it noted.
With the US accounting for 27 per cent of India's auto component exports and 17 per cent of tyre exports, the tariff hike places Indian manufacturers at a disadvantage compared to Asian peers such as Japan, Vietnam, and Indonesia, which face lower or preferential duties, Icra said.
The increased tariffs could dent the competitiveness of Indian suppliers, especially in off-highway and replacement tyre segments, and across various automotive components, it said.
While Indian tyre exporters previously enjoyed a modest advantage over Chinese competitors, that edge may now be offset by the lower tariff rates granted to other Southeast Asian nations.
Auto component exporters, particularly those heavily reliant on the US market, are expected to diversify their geographies and improve cost efficiencies to lessen the impact, it said.
The auto components industry reported a turnover of USD 80.2 billion (Rs 6.73 lakh crore) for FY2025, a growth of around 10 per cent as compared with FY2024.
Exports of auto components grew by 8 per cent to USD 22.9 billion (Rs 1,92,346 crore) in FY25 from USD 21.2 billion (Rs 1,75,960 crore) in FY24.