Navigating Tariff Turbulence: US Tariffs Challenge Indian Auto Component Industry's Growth

The US tariffs on auto components are expected to impact India's domestic industry, particularly in the latter half of the fiscal year. Despite challenges, the industry showed a 6.8% growth in the first half, buoyed by stable demand and capacity expansion. Export growth faced headwinds, highlighting the need for strategic adjustments.

The imposition of US tariffs on auto components is poised to pose significant challenges for India's domestic industry in the second half of the fiscal year, according to the Automotive Component Manufacturers Association (ACMA). Despite these hurdles, the industry exhibited a commendable 6.8% growth during the April-September period of FY26, as key players navigated uncertainties surrounding new contracts.

Exports rose by 9.3% to USD 12.1 billion, while imports surged by 12.5% to USD 12.3 billion, resulting in a trade deficit of USD 180 million. Experts predict that the impact of the tariffs will become more pronounced moving forward, given that they were only introduced at the end of this period.

Challenges notwithstanding, the auto component industry achieved significant growth due to robust domestic demand and advancements in technology and capacity. The reduction in GST and a shift towards electric vehicles are expected to support demand in the next fiscal phase, although geopolitical uncertainties and raw material costs may pose ongoing obstacles.

(With inputs from agencies.)