This is expected to influence the export of $ 3.08 billion exports for the US, the largest destination for Indian car parts. Components for cars and small trucks with a value of $ 3.58 billion will continue under the existing 25%duty.
“The rate of 25% was already a handicap, but 50% make it almost impossible to do business with American customers under the current circumstances,” said a senior executive at a car component maker who asked not to be mentioned. “We have no choice but to evaluate other markets or to reconsider our production footprint.”
Indian companies sent in 2024 for $ 6.6 billion in car parts to the US. Companies are now investigating whether the production for the American market can be moved to plants at locations such as Mexico where rates are relatively lower than India. “Different Indian players already have units abroad and they investigate whether delivering the US is economically useful from this bases,” said another industry director.
However, some companies see opportunities in adversity. Sansera Engineering, based in Bengaluru, which supplies motor and chassis parts, said they are fast plans to set up a factory in the US. “We are considering setting up a facility and now wanted to accelerate it,” said Father Singhvi, joint director. The US contributes 6-7% of Sansera export, with various leading makers of the passenger vehicle in its customer schedule.
Singhvi noted that Sansera’s highly voted products cannot quickly be replaced or produced locally in the US despite the raised rates. “The revival of American production after years of deterioration is not feasible within 3-5 years, making immediate replacement impractical. Setting up a Greenfield factory will enable us to better serve the market and limit the tariff risks in the longer term,” he said, adding the company is also looking for alternative exports.
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