U.S. Tariff Sparks Minimal Impact on India's Auto Industry, Potential Growth for Exporters

President Trump's 25% tariff on fully built vehicles is unlikely to impact India's auto sector significantly, given the country's minimal exposure to the U.S. car market. The Global Trade Research Initiative suggests the tariff may present growth opportunities for Indian auto parts exports, encouraging careful strategic planning rather than retaliatory measures.

In a recent move, U.S. President Donald Trump has announced the imposition of a 25% tariff on fully built vehicles and auto parts. Despite causing ripples across global automotive industries, this decision is projected to have minimal impact on India's automotive sector, according to an analysis by the Global Trade Research Initiative (GTRI).

The GTRI highlights that India's passenger car exports to the United States are relatively insignificant, at just USD 8.9 million in 2024 out of USD 6.98 billion in total global car exports. This constitutes a mere 0.13% of India's car export market, rendering the tariff's effect negligible for Indian automakers. Instead, the tariff might present an opportunity for India's auto component industry, which accounted for USD 2.2 billion in U.S. exports, 29.1% of its global auto parts exports.

India's strength in labor-intensive manufacturing and favorable import tariff structures could allow Indian exporters to increase their market share in the U.S. auto parts sector. GTRI recommends that rather than retaliating, India should adopt a wait-and-watch strategy, as the long-term impact of the tariff may prove neutral or even favorable for Indian exports.

(With inputs from agencies.)