Domestic manufacturing of industrial goods in sectors such as automobiles and auto components, shipbuilding, basic metals and so on may be impacted as a reduction or removal of import duties on industrial products imported from US, experts have said.
“The industrial products in these sectors (Auto , shipbuilding) currently have the highest MFN rate and are thrust sectors in India’s manufacturing which may face high competition from goods imported from US,” said Bipin Sapra , partner and indirect tax policy leader at EY India.
India-US trade deal
According to India-US trade deal, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products.
“Import-competing segments may face heightened competitive pressure in the short term, especially where domestic scale, technology depth, or standards are still evolving,” said Sanjay Budhia, Chairman CII National Committee on Exports and Imports.
He added that at the same time, cheaper access to high-quality inputs, capital goods, and advanced technologies can lower production costs and raise productivity for downstream industries.
Over the medium term, the net impact will depend on how quickly Indian firms upgrade capabilities, invest in R&D, and integrate into global value chains, including deeper linkages with the US, Budhia said.
What do other market observers say?
Sapra of EY agreed with Budhia. For those final products which compete with Indian products, the companies will have to become more competitive by reducing cost of manufacturing and the government will need to make policies which will help the industry become competitive, he said.
Usually, raw materials and capital equipment in sectors such as energy and mining, heavy engineering and electrical and electronics manufacturing, medical devices, plastics and petrochemicals, organic chemicals etc. are imported in high quantities from the U.S. into India, he said Hence these sectors are likely to gain due to reduced costs of industrial inputs from the US, Sapra said.
India’s move to reduce or eliminate duties on US industrial goods will lower capital costs for advanced equipment and critical materials, benefiting sectors such as chemicals, plastics, rubber and industrial materials, said Anurag Choudhary, CMD and CEO of Himadri Speciality Chemical.
“For us, these shifts help accelerate market expansion and rapidly scale our innovation curve. Lowered input costs further strengthen our speciality chemicals and battery‑materials capabilities, amplifying R&D and integration efforts.,” he said