India-US Trade Agreement to Significantly Boost Auto Component Industry
India's auto component sector is poised for a major transformation following the landmark India-US trade deal, which grants preferential tariff treatment for exports, including zero-duty access for select products. This strategic agreement marks a pivotal shift in bilateral trade relations, directly addressing previous barriers that hindered market access.
Key Provisions and Immediate Benefits
The joint statement outlines that India will receive a preferential tariff rate quota for automotive parts currently subject to US national security tariffs. This creates a clear and advantageous pathway for Indian exporters to enter the US market with significantly reduced or eliminated duties. Previously, steep tariffs of up to 50% on certain auto components had severely impacted export competitiveness, making this new framework a critical relief for the industry.
Industry Leaders Hail the Agreement as Transformative
Vikrampati Singhania, President of the Automotive Component Manufacturers Association (ACMA), emphasized that this move signals a strong intent to strengthen bilateral manufacturing and supply chains. He stated, "These measures will lead to enhanced export competitiveness, deepen technology collaboration, and reinforce India's role as a trusted partner in resilient global automotive supply chains."
Ravi Mehra, Managing Director at auto component maker Uno Minda, highlighted the agreement as opening a new phase of export-led growth. "For Uno Minda, this opens up compelling opportunities to further scale our footprint, strengthen supply-chain agility and expand our contribution to the US market while proudly reinforcing India's position as a world-class manufacturing hub," he said.
Enhanced Cost Competitiveness and Market Expansion
Arvind Chandra, Whole-Time Director and CEO of Tenneco India, noted that the reduction in US tariffs will significantly improve the cost competitiveness of India-made components. "This will significantly enhance the cost competitiveness of our premium products like shock absorbers and exhaust systems in the US market, positioning us to grow our presence, scale volumes, and strengthen integration within the supply networks of American OEMs," he explained.
Bharat Forge described the deal as a "game changer" for Indian industry, adding that it strengthens India's position in global supply chains, underscoring the broad consensus on its positive impact.
Export Performance and Future Outlook
According to ACMA data, exports to the US were valued at $6.2 billion in 2024-25, with the first half of this year already reaching $3.1 billion. This robust performance sets a strong foundation for accelerated growth under the new tariff regime. The agreement is expected to:
- Boost export volumes and revenue for Indian auto component manufacturers.
- Foster deeper technology and manufacturing collaborations between Indian and US firms.
- Enhance India's reputation as a reliable and competitive hub in the global automotive supply chain.
- Drive innovation and quality improvements to meet international standards.
Overall, the India-US trade deal represents a strategic milestone that not only benefits the auto component industry but also reinforces economic ties, positioning India for sustained growth in the international market.
