New Delhi [India] August 5 (ANI): Indian auto part exporters are set to face a aggressive drawback within the United States market following the imposition of a 25 per cent tariff on Indian items by US President Donald Trump, says a current report by score company ICRA.
ICRA flagged the pressing want for signing of bilateral commerce settlement (BTA) between India and the US to keep away from long-term setbacks in considered one of India’s most important export sectors.
The US introduced new tariffs on July 31, efficient August 7, as a part of the broader reciprocal measures and likewise threatened potential penalties linked to India’s crude and defence imports from Russia.
US tariff fee of 25 per cent in opposition to India is greater than that confronted by different main Asian exporters like Japan (15 per cent), Vietnam (20 per cent), and Indonesia (19 per cent), placing Indian exporters at a relative drawback.
ICRA famous that round 30 per cent of the Indian auto part business’s revenues come from exports, with 27 per cent of that headed to the US. As a end result, almost 8 per cent of complete manufacturing on this sector is immediately uncovered to the brand new tariff regime of U.S.
‘Tariffs at 25 per cent for Indian auto elements are considerably greater in comparison with these on Japanese and European exports,’ the report said. ‘This locations Indian exporters at a strategic drawback, particularly as Canada and Mexico stay exempt underneath USMCA.’
The report highlighted that the aggressive strain is more likely to intensify, prompting Indian companies to diversify into non-auto sectors, search various markets, and provoke cost-optimisation measures. Exporters closely reliant on the US are already exploring new geographies throughout Asia and past to de-risk their operations.
Despite being at a marginal benefit in comparison with China, which faces a 30 per cent US tariff, Indian companies are unlikely to profit until a complete commerce settlement is reached quickly. ‘While this will open long-term alternatives, the near-term uncertainty is acute,’ the report cautioned.
The ICRA report underscored the broader affect of the US tariff coverage on India’s GDP, revising the nation’s FY2026 development forecast downwards by 20 foundation factors to six per cent. It warned that additional penalties, but to be quantified, might exacerbate this draw back.
Besides auto elements, different key sectors like textiles, lower and polished diamonds, tyres, and non-ferrous metals are additionally anticipated to really feel the pinch as a result of higher-than-expected tariff introduced by U.S.
However, exemption to prescription drugs and petroleum merchandise, presents some aid.
The report famous {that a} bilateral commerce settlement between India and the US, is not only necessary but in addition important for India’s exports. Without it, India dangers shedding its strategic edge in a number of high-value export classes, with auto elements topping the listing. (ANI)