Indian auto component exporters are anticipating only modest benefits from the recent US tariff reductions, as the relief primarily targets commercial vehicle (CV) and tractor parts, leaving passenger vehicle (PV) components largely unaffected.
This is because the US had categorized auto parts into two distinct groups for tariff purposes.
The first group—car parts—was taxed under Section 232, which imposed a 25% additional duty on top of the existing 2.5% tariff, bringing the total to 27.5%. The second group—CV and tractor parts—fell under the US reciprocal framework.
The second group was effectively hit twice, with duties increasing by 50% due to India’s purchase of Russian oil. In a recent announcement, the US said it would cut reciprocal tariffs to 18%, leaving ambiguity over Section 232 duties, which still apply to parts of the automobile industry but are treated separately.
Car part exporters may not see significant gains
Industry executives caution that if US benefits are limited to the second group, car part exporters may not see significant gains. “If Section 232 duties continue to apply to passenger vehicle components, it could slow growth in this segment,” said an executive.
Moreover, the US has already reduced tariffs on the second group—CV and tractor parts—to 25% from November 2025. This means the recent reduction from 25% to 18% is relatively modest and unlikely to make a significant impact on the sector as a whole.
Passenger vehicle components remain the largest share of Indian auto component exports. According to the Automotive Component Manufacturers Association of India (ACMA), PV parts accounted for 43% of India’s auto component exports in 2025, while CVs contributed 24%, tractors 7%, and the remaining 26% came from two-wheelers, three-wheelers, and construction equipment.
A significant reduction in tariffs would have been particularly impactful because the US is the single largest market for Indian auto components, absorbing approximately $6.18 billion—roughly 27% of the $22.9 billion exported in 2025. This underscores the importance of tariff relief for Indian exporters.
Overall package cannot be considered a win
Industry executives noted that if car parts do not receive tariff relief, the overall package cannot be considered a win for the sector. “If around half of the industry is left out of relief, it is not a victory on any account. Moreover, the actual tariff reduction is only from 25% to 18%,” one executive said.
The industry is now awaiting detailed US notifications outlining the precise scope, timelines, and eligibility criteria for the tariff reductions.
With PV components forming nearly half of the export basket, any delay or partial relief could affect India’s overall auto component export growth. Industry stakeholders emphasize that targeted measures, in addition to reciprocal tariff cuts, are critical to sustaining momentum in the component industry.