India's Auto Component Industry Braces for Minimal Impact Amid Proposed US Tariffs

India's auto component industry is poised to experience limited effects from potential tariffs by President Trump, with India constituting only 3% of US imports. Meanwhile, larger suppliers like the EU and China are expected to face significant impacts. Thailand and Vietnam see growth in US exports, indicating diversification of supply.

The Indian automotive component sector is likely to experience minimal repercussions from President Donald Trump's proposed reciprocal tariffs aimed at the industry, according to a recent analysis by Nomura.

The study indicates that India's contribution to the $97 billion worth of automotive components imported into the United States from outside North America is a mere 3%.

In contrast, major suppliers including the European Union, China, Japan, and South Korea are projected to suffer considerable impacts. Last year, the EU supplied $22 billion worth of components, with China at $18 billion, Japan at $16 billion, and South Korea at $13 billion. Despite mild increases in exports from China and Japan, the EU and South Korea saw declines.

Although India's portion of U.S. auto parts imports remains comparatively minor, the nation is increasingly asserting itself within the global automotive supply network. The imposition of new tariffs could reduce the competitiveness of Indian exports, potentially compelling automakers to seek alternative suppliers.

The report also highlights trends in car imports to the United States. In 2024, South Korea led with 1.39 million vehicles, marking a 25% growth year-on-year, followed by Japan with 1.31 million units, a slight 2% decrease, and the EU with 0.77 million units, another 2% drop.

Notably, Thailand and Vietnam experienced the most significant upticks in auto parts exports to the U.S., increasing their numbers by 9% and 14% respectively in 2024. This pattern signals an existing move to diversify supply channels within the U.S. auto sector. Any enactment of Trump's suggested tariffs could profoundly affect the global auto supply chain.

Although India's burgeoning automotive industry may not be heavily impacted due to its relatively small share, it could still encounter challenges. The focus now shifts to global automakers' strategic responses to potential trade policy shifts.