The US administration’s decision to impose 25 per cent tariff on Indian exports from August 7 has put the country’s industries in a tizzy.
Rating firm Icra said on Saturday that the Indian auto components and tyre industries were preparing to bear the brunt of the tariffs as they had been put in unfavourable positions when compared with Asian peers like Japan, Vietnam, and Indonesia, which had all secured lower duties in their trade pacts with the US.
“Imposition of a 25 per cent tariff by the US on Indian imports has raised concerns across India’s automotive and tyre industries, both of which maintain substantial export exposure to the US market,” the firm noted.
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With the US accounting for 27 per cent of India’s auto component exports and 17 per cent of tyre exports, the tariff hike could dent the competitiveness of Indian suppliers, especially in off-highway and replacement tyre segments, and across various automotive components, it said.
Exports of auto components grew by 8 per cent to USD 22.9 billion (₹1,92,346 crore) in FY25 from USD 21.2 billion (₹1,75,960 crore) in FY24.
The auto components industry also reported a turnover of USD 80.2 billion (₹6.73 lakh crore) for FY2025, a growth of around 10 per cent as compared with FY2024.
The modest advantage that Indian tyre exporters previously enjoyed over Chinese competitors may now be offset by the lower tariff rates granted to other Southeast Asian nations.
As a result, auto component exporters, particularly those heavily reliant on the US market, may have to diversify their geographies and improve cost efficiencies to lessen the impact, the report added.
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