Auto Component Industry Hit by US Tariff Hike

The Indian auto component sector faces potential revenue losses up to Rs 4,500 crore due to the new US tariff hike on key automobile parts. This change affects the competitiveness and pricing strategy, as suppliers and exporters deal with the increased cost burdens.

Leading auto component manufacturers in India could suffer a revenue loss of up to Rs 4,500 crore this fiscal year due to a decline in overseas shipments resulting from the recent steep increase in US import tariffs, as reported by ratings firm Icra on Monday.

Icra projected that the revenue growth for the Indian auto component industry, which currently racks up over Rs 3 lakh crore annually, may ease to 6-8 per cent by FY2026, a dip from the previously anticipated 8-10 per cent. This adjustment is attributed to a mid-to-high single-digit revenue decline in exports to the US due to the new tariff hurdles.

The 25 per cent tariff imposed by the US, effective May 2025, on essential automobile parts could escalate costs by about Rs 9,000 crore, impacting US consumers, importers, and Indian exporters. Despite negotiations, the passing through of these costs will heavily depend on the competitiveness and price elasticity of the Nigerian products.

(With inputs from agencies.)