NEW DELHI: India’s automotive components sector is likely to gain substantially following the US decision to offer a preferential tariff quota on auto parts. This move, according to industry experts, mitigates the effects of national security tariffs that had previously hampered shipments to India’s biggest export destination.
India’s auto components industry relies heavily on the US as its top export market, which captures 26% of total shipments and dominates North American sales. Recent data released by Industry body shows exports to North America fell 1% year-over-year to $3.64 billion in the first half of FY26 (January–June 2025).
“…consistent with U.S. 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,” India and the US said in a a joint statement.
The Automotive Component Manufacturers Association of India (ACMA) has welcomed the announcement of the Interim Trade Agreement framework between India and the United States.
Vikrampati Singhania, President, ACMA and Vice Chairman & MD, JK Fenner (India), said “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.”
He added that these measures will lead to enhanced export competitiveness, deepen technology collaboration, and reinforce India’s role as a trusted partner in resilient global automotive supply chains.
ACMA had last month said that automakers in the US are deferring new orders from Indian auto component manufacturers after President Donald Trump raised tariffs on Indian goods to 50%, one of the highest rates applied for any nation, last year. September 2025 was the first full month of Trump’s 50% tariffs on Indian goods. This includes a 25% penalty for India’s refusal to stop buying oil from Russia.
A large number of Indian auto component were hit by the increased tariffs as US remains a major market for them. Companies such as Sona BLW Precision Forgings and Bharat Forge derive around 40% of their revenues from the US.
Ravi Mehra, MD, Uno Minda said on Tuesday that the landmark India–US trade agreement is a strong validation of India’s manufacturing excellence and reinforces our role as a trusted, high-quality partner in the global automotive value chain.
“The stability on tariffs brought by this agreement significantly enhances export competitiveness and encourages advanced technology collaboration between the two countries. For Uno Minda, this opens up compelling opportunities to further scale our footprint, strengthen supply-chain agility and expand our contribution to the US market—while proudly reinforcing India’s position as a world-class manufacturing hub,” added Mehra.
