Auto component makers have urged a dialogue between the Indian and US governments in the wake of US President Donald Trump's big bang "Liberation Day" announcements of large, reciprocal tariffs. Some Indian component manufacturers have significant exposure to north American markets.
The Big Three of US auto (Ford, General Motors, Stellantis) comprise more than a third of the revenues of some Indian suppliers, while others have minimal presence in international markets.
"ACMA (Automotive Components Manufacturers Association) remains hopeful that ongoing negotiations between the Indian and US governments will lead to a balanced resolution that benefits both economies. We believe that the strong trade relationship between India and the United States, especially in the auto components sector, will encourage continued dialogue to mitigate the impacts of these measures," said Shradha Suri Marwah, President, ACMA, and Chairman and Managing Director of Subros, an auto parts maker.
In 2024, India exported $2.2 billion worth of auto components to the US, or around 30 percent of its total auto component exports, according to the Global Trade Research Initiative.
Suppliers to the US markets export components such as braking and steering systems, transmissions, etc, including parts needed for electric vehicles (EVs). Their customers include Ford, General Motors, Stellantis, Tesla, and others.
Analysts said that the tariffs may cause a steep increase in the prices of cars and trucks in the US, with ripple effects on component manufacturers. However, the actual impact on Indian suppliers will hinge on talks between the two governments on whether exemptions could be sought for more export items, as has been the case for pharmaceuticals.
"In the event of prices going up, the US car market may witness a steep decline in volume, and that can impact the revenue of component suppliers. Further, margins of suppliers may come under pressure as they may need to partly absorb the cost pressures. Having said that, it needs to be seen how higher tariffs are absorbed across the supply chain, which includes customers, OEMs, and suppliers. The extent of impact on Indian players will also depend on the US-India bilateral agreement," said Arun Agarwal, Vice President, Fundamental Research, Kotak Securities.
Recent investor reports show that the revenues of multiple component suppliers such as Bharat Forge, Sona BLW Precision Forging, Samvardhana Motherson, etc., may be hit if the tariffs take effect in May, as promised by the Trump administration.
Sona BLW Precision Forging, branded as Sona Comstar, pulled in 43 percent of its topline from north America in the first nine months of FY25, up from 40 percent in FY24. The company has a manufacturing plant in the United States, as well as in Mexico.
Rating agency Moody's stated in a recent report that India-listed Samvardhana Motherson International Limited (SAMIL) also stands exposed as 20 percent of its revenue comes from the US, including remote jobwork locations such as Mexico. However, Moody's said that the company has taken some mitigation measures.
"SAMIL will likely seek to pass on tariff-induced cost increases to its customers. It is also pursuing a diversification strategy to ensure that no single component, customer, or country accounts for more than 10 percent of its revenue," the report said. In a recent regulatory filing, SAMIL added that a number of its products are also manufactured in the United States, or are compliant with the US-Mexico-Canada (USMCA) trade agreement.
Analysts have added that a tariff revision remains a distinct possibility due to issues with setting up manufacturing facilities in the US.
"The US manufacturing wage is around 10 times that of India , making it difficult to completely shift production, so a revision of the tariffs remains a possibility," said Sanket Kelaskar, Analyst, Institutional Equities, Ashika Group, a financial services conglomerate.
Trump announced a 25 percent tariff on all auto and auto component imports into the US on April 2, which will kick in from May. Indian manufacturers export just 3 percent of their cars to the US, according to a report from Moody's, although Tata Motors has a large exposure to north American markets through its Jaguar Land Rover marque.
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