Indian Automobile Industry and Trump’s Tariff on Auto Exports:

28 March 2025

India's automobile industry has become a significant global player, with the United States serving as a key export destination. This article examines India's automobile exports to the U.S., covering total export values, segment-wise breakdowns, company contributions, growth trends, the impact of tariffs, and a global comparative analysis.

Total Value of Automobile Exports to the U.S.

India’s automobile and auto component exports to the U.S. have grown substantially over the years. In the fiscal year 2023-24, the total export value of auto components alone reached $6.79 billion, highlighting the U.S. as a crucial market for Indian manufacturers (ACMA Annual Report 2024).

Breakdown by Segment

1. Passenger Vehicles (PVs)

Export Value: In 2023, India exported $37.11 million worth of passenger vehicles to the U.S.
Volume: Specific unit volumes for passenger vehicle exports are not readily available.

2. Two-Wheelers

Export Value: Detailed figures for two-wheeler exports to the U.S. are limited. However, India’s overall two-wheeler export market has shown steady growth.
Volume: Exact unit volumes are not specified.

3. Auto Components and Parts

Export Value: Auto component exports to North America, primarily the U.S., totaled $6.79 billion in FY 2023-24.
Key Products: Engine parts, transmissions, braking systems, and electrical components (ACMA Annual Report 2024).

Volume of Exports (in Units)

While precise unit volumes are not widely documented, available data indicates:

Passenger Vehicles: India exported $37.11 million worth of cars and vehicles for transporting persons in 2023.
Two-Wheelers: Specific unit volumes remain unavailable.

Growth Trends

India’s auto exports to the U.S. have been rising steadily, fueled by demand for cost-effective vehicles and high-quality auto components. Auto component exports, in particular, have shown consistent growth, reinforcing India’s position as a low-cost, high-quality manufacturing hub (Economic Times, 2024).

Company-Wise Breakdown of Exports

1. Passenger Vehicles

Tata Motors (Jaguar Land Rover): Exports Jaguar Land Rover models assembled in India.
Mahindra & Mahindra: Exports SUVs, off-road vehicles, and tractors, including the Roxor, to the U.S.
Maruti Suzuki: Limited direct exports, with contributions through Suzuki’s global supply chain.

2. Two-Wheelers

Bajaj Auto: Major exporter of motorcycles and three-wheelers, catering to niche segments.
TVS Motor Company: Increasing scooter and motorcycle exports to North America.

3. Auto Components and Parts

Bharat Forge: Supplies forged components such as crankshafts and transmission parts.
Motherson Sumi Systems: Provides wiring harnesses and electrical components.
Sundaram Fasteners: Exports fasteners and precision-engineered components.
Amara Raja Batteries: Supplies automotive batteries.
Varroc Engineering: Exports lighting systems and plastic components.

4. Tractors and Agricultural Equipment

Mahindra & Mahindra: A leading exporter of tractors to the U.S., widely used by American farmers.

Impact of U.S. Tariffs on India's Automobile Industry

The recent 25% tariff imposed by the U.S. on imported cars and auto parts presents significant challenges for India’s automobile industry. Indian companies, including Tata Motors and auto parts suppliers like Sona Comstar, have already seen stock declines following the announcement.

Key Impacts :

Higher costs for Indian exports, reducing competitiveness.
Potential shift towards local production in the U.S. to bypass tariffs.
Companies exploring alternative export markets to mitigate risks.

(Business Standard, 2024)

Global Export Performance

India’s automobile exports have been robust on a global scale. In 2023, India exported $7.85 billion worth of cars, ranking 24th among the world’s top car exporters.

Key Export Destinations :

Saudi Arabia
South Africa
Mexico
United Arab Emirates
Chile

(CII Report, 2024)

Company Perspectives on Tariff Challenges

1. Bharat Forge

Impact: Higher tariffs on forged components may reduce price competitiveness.
Response: Diversifying exports to Europe and Asia to reduce dependency on the U.S. market.

2. Motherson Sumi Systems

Impact: Increased costs for U.S. automakers sourcing Indian electrical components.
Response: Expanding manufacturing operations in the U.S. and Mexico.

3. Sundaram Fasteners

Impact: Increased costs for fasteners and precision components, affecting profitability.
Response: Lobbying for favorable trade policies while targeting new export markets.

4. Amara Raja Batteries

Impact: Tariffs on automotive batteries could slow market penetration in the U.S.
Response: Enhancing technology and efficiency while exploring joint ventures.

5. Varroc Engineering

Impact: Tariffs on lighting systems and plastic components may reduce U.S. sales.
Response: Global expansion strategy to reduce dependence on U.S. exports.

Common Industry Strategy

To counter the impact of tariffs, Indian automobile companies are focusing on:

Diversification : Expanding exports to non-U.S. markets.
Localization : Setting up manufacturing bases in tariff-friendly regions.
Negotiation : Engaging with U.S. policymakers to advocate for lower trade barriers.

Conclusion

India’s automobile industry has built a strong presence in the U.S. market, particularly in the auto components sector. However, the recent U.S. tariff policy shift presents new challenges. The industry's ability to adapt, diversify, and localize production will be crucial in maintaining growth and sustaining its export trajectory. While obstacles exist, India's reputation for cost-effective, high-quality manufacturing ensures it remains a key global player in the automobile export market.

References & Sources :

Automotive Component Manufacturers Association

Economics Times Business Standard

Companies Annual Reports Confederation of Indian Industry