New Delhi, February 17
India's auto component industry is expected to face only a limited impact from the potential reciprocal tariffs proposed by US President Donald Trump on auto industry, according to a report by Nomura.
The report highlights that India accounts for just 3 per cent of the USD 97 billion worth of auto components imported by the US from outside North America in 2024.
In contrast, other major auto component suppliers to the US, such as the European Union (EU), China, Japan, and South Korea, are expected to be hit the hardest by these tariffs.
The report showed that in 2024, the EU exported USD 22 billion worth of auto parts to the US, China USD 18 billion, Japan USD 16 billion, and South Korea USD 13 billion. While China and Japan saw slight growth in their exports, the EU and South Korea witnessed declines.
India's share in US auto parts imports remains small compared to other major suppliers. However, the country has been steadily expanding its role in the global automotive supply chain. The introduction of new tariffs could make Indian exports less competitive and force automakers to look for alternative sources of components.
Apart from auto components, the report also sheds light on car imports to the US. Outside North America, the largest sources of new cars sold in the US in 2024 were from South Korea around 1.39 million units (+25 per cent year-on-year). Japan at second position with 1.31 million units (-2 per cent Y-o-Y) and EU at 0.77 million units (-2 per cent)
Interestingly, Thailand and Vietnam saw the biggest growth in auto parts exports to the US in 2024, with increases of 9 per cent and 14 per cent year-on-year, respectively. This suggests that the US auto industry is already diversifying its supply chains.
If Trump implements his proposed tariffs, it could significantly impact the global auto supply chain. While India may not bear the brunt of these tariffs due to its relatively small market share, the country's growing automotive sector may still face challenges.
The focus will now be on how global automakers adjust their sourcing strategies in response to potential trade policy changes.
- ANI