The automotive and engineering components sector in India is experiencing a “mixed bag” of fortunes following the imposition of US tariffs. Companies that manufacture niche or critical parts and maintain deep-rooted customer relationships have managed to withstand the pressure more effectively. Conversely, manufacturers of generic parts are facing severe margin erosion as orders are increasingly diverted to competing markets like China and Taiwan.
The tariff rates vary significantly by segment, with passenger car and small truck components attracting a 25% tariff, while parts for heavier classes of trucks and construction equipment face duties as high as 50%. While some exporters have found minor relief in a depreciating rupee, many are forced to offer deep discounts to US customers who are becoming increasingly wary of doing business with Indian suppliers amid the trade stalemate.
In response to these challenges, many firms are attempting to pivot toward domestic markets or increase their business share in Europe and the Middle East where demand remains stable. Industry veterans note that while production has not yet been broadly cut, the long-term survival of small and medium enterprises in major hubs like Pune and Coimbatore is at risk if a bilateral solution is not reached soon.