New Delhi [India]: The 25% tariff imposed by U.S. President Donald Trump on completely built-up (CBU) vehicles and auto parts is expected to have minimal impact on India’s automobile industry, according to a report by the Global Trade Research Initiative (GTRI).
While the decision has sparked concerns among global car manufacturers, India’s limited exposure to the U.S. auto market suggests that the effect will be negligible—and may even create new opportunities for Indian exporters.
Insignificant Car Exports to the U.S.
According to GTRI, India’s passenger car exports to the U.S. stood at just $8.9 million in 2024, a tiny fraction (0.13%) of its total global car exports of $6.98 billion. Given this negligible share, the tariff is unlikely to hurt Indian automakers.
“The announcement sent ripples through global automotive markets, but its implications for India’s auto industry remain limited—and may, in fact, present an opportunity for Indian exporters,” the GTRI stated.
The report further noted that any countermeasures by India in response to the tariff would be unnecessary and counterproductive due to the country’s low reliance on the U.S. market.
Auto Parts Industry Could Benefit
On the other hand, India’s auto component exports to the U.S. are significant, amounting to $2.2 billion in 2024—29.1% of its total global auto parts exports. Despite this, the U.S. remains a large and diverse market, and since the new tariff applies to all exporting nations, India does not face a competitive disadvantage.
“India’s auto component industry may even find an opening. With its strong manufacturing base, cost-effective labor, and competitive import tariff structures (ranging from 0% to 7.5%), India could expand its market share in the U.S.,” the GTRI noted.
Limited Vulnerability in Other Segments
The report also highlighted that India’s truck exports to the U.S. stood at $12.5 million, accounting for only 0.89% of the country’s global truck exports.
These figures indicate that India’s overall exposure to the U.S. automotive market remains low, making the new tariff manageable for Indian manufacturers.
A Strategic Approach for India
While the global auto industry is facing uncertainty due to the tariff, India’s auto sector appears well-positioned to navigate the changes.
The GTRI advises a “wait-and-watch” approach rather than retaliatory measures, as the long-term impact of the U.S. tariff could be either neutral or beneficial for Indian exporters.
With its cost advantages, skilled labor, and competitive tariff structures, India could strengthen its position in the global auto parts market despite the trade tensions.