Our Bureau
New Delhi
Indian auto component manufacturers with production facilities in Canada and Mexico are unlikely to be significantly affected by the recent US tariffs, as these countries are exempt from the additional duties. The White House has confirmed that the new tariffs will not apply to Canada and Mexico due to existing orders related to fentanyl and migration under the International Emergency Economic Powers Act (IEEPA).
Under the US-Mexico-Canada Agreement (USMCA), goods from these countries that are compliant will continue to have zero duty, while non-compliant items will face a 25% tariff. Samvardhana Motherson International Ltd, an Indian auto component maker, has stated that a significant portion of their products are USMCA-compliant, minimizing the potential impact of the tariffs.
While India’s auto component exports to the US were USD 6.79 billion in FY24, a Crisil Intelligence report indicates that the limited exposure of domestic component manufacturers to the US market will shield their revenue. The report notes that only a small percentage of India’s automotive production is exposed to the US, further reducing the impact of the tariffs.
However, there may be a potential reduction in the competitiveness of domestic component makers due to increased prices in the US. This situation could benefit Mexico and Canada, which are covered under the USMCA and account for a significant portion of overall imports to the US.
Despite the limited direct impact, industry experts believe that the tariff war presents an opportunity for Indian automakers to tap into the US market with new energy vehicles. With rising automotive tariffs in the US, India’s electric vehicle sector could potentially capture a larger share of the market, especially in the budget car segment.