US reciprocal tariff on auto may not hit Indian industry

There will not be much impact to the Indian automobile industry if the US government applies reciprocal tariffs on automobiles, as very few vehicles are going to the country from India, industry veterans said on Wednesday (5 Mar ’25). On Tuesday, specifically speaking on tariff rates by India on auto imports, US President Donald Trump said, “It is very unfair. India charges us auto tariffs higher than 100 per cent. China’s average tariff on our products is twice what we charge them. And South Korea’s average tariff is four times higher.” However, India is confident of finding a solution, under the bilateral trade agreement (BTA) following the visit of Prime Minister Narendra Modi and his talks with Trump on February 13 in Washington DC, people aware of the matter said.

According to experts tracking the sector, there is no threat to the Indian auto industry from the US’s reciprocal tariff but other countries may also raise questions if India comes to an understanding with the US specifically on lowering tariffs. Experts said the Indian government can re-think on import tariffs in the auto industry but has to consider the impact on other countries.  “The impact would be very minimal as we don’t export much to the US, and import is also very limited. Even Tesla, which is planning to come to India, will import from the Germany facility, and not from the US. So, it will not impact much to the Indian manufacturers, and also countries like South Korea, Japan or Europe, because the OEMs are already manufacturing in a big way in India,” said an industry veteran. However, according to Puneet Gupta, Director, Sales and Powertrain Forecast, India & ASEAN, S & P, any tariff if reduced should be for all original equipment manufacturers (OEMs), to avoid any ambiguity among car manufacturers.

 “Government may need to rethink on import tariffs in the auto industry. Indian auto industry has come a long way and is established now. So such kind of protectionism is not required. Actually, it’s time industry becomes more competitive so that it can enhance and invest in technology and export from India and give a fillip to ‘Make in India and Make for the World’ as per the vision of India,” Gupta said.

From India, the major exports to the US is in the auto components sector. Of the $21 billion components exported from India, only around $7.6 billion worth of parts are exported to US.