Indian Auto Exporters Hit by US Tariff Surge: Call for Immediate Trade Agreements

Indian auto component exporters are bracing for challenging times following the imposition of a 25 per cent tariff on Indian goods by the United States. This development has placed them at a critical disadvantage, according to a report by rating agency ICRA, which calls for a bilateral trade agreement between India and the US to offset potential long-term damage to one of India's key export sectors.

The tariffs, announced on July 31 and effective from August 7, are part of broader reciprocal measures and come with threats of penalties linked to India's imports of crude and defense supplies from Russia. Indian exporters now face a tariff rate higher than their counterparts in Japan (15 per cent), Vietnam (20 per cent), and Indonesia (19 per cent), positioning them poorly in the competitive American market.

ICRA's report emphasizes that 30 per cent of the revenue in India's auto component sector comes from exports, with 27 per cent directed to the US, making almost 8 per cent of the total production vulnerable to the new tariff structure. If no trade agreement is reached, Indian exporters may need to pivot to alternative markets, explore non-automotive sectors, and implement cost-cutting strategies to sustain profitability.

(With inputs from agencies.)