India's auto parts exports to US remain strong despite tariff tensions

The United States continued to remain the single largest export market for auto parts makers in India in the financial year ended March 31, 2026 despite the heightening tension over tariffs between the two countries.

The United States accounted for 26% of all auto components exported from India last fiscal, followed by Germany (9%) and Thailand (4%), respectively as per data available with Automotive Component Manufacturers Association (ACMA). Auto component exports from India rose by 5% to $ 24 billion in FY26.

The development comes even as investigations are underway by the office of the United States Trade Representative (USTR) into unfair practices being followed by auto parts exporters from the country. The investigation under Section 301 is being undertaken on two counts - of unfair labour practices in India and creation of excess capacities backed by government subsidies.


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The next meeting on the matter is scheduled for hearing later this month. India is among 16 countries being investigated by the USTR.

Vinnie Mehta, director general, ACMA said, “If we had overcapacity why would the industry be investing now in expanding production? The auto component industry does not get any subsidy from the government, In fact, out of the 1100 members at ACMA, only two have received disbursements under the PLI (Production Linked Incentive) scheme.”

Mehta refuted allegations of unfair labour practices in the country. “They (USTR) have alleged that we mistreat our labour. The auto component industry in India is highly organised and adheres to the national labour code. Use of child labour - which is another allegation - is non-existent”, Mehta said.

Nearly half of auto parts exported from India to the US attract tariff of 25%, and the remaining 12.5%. The components on which the rate of 12.5% is levied are currently under investigation by the office of USTR.

Interestingly, the development comes even as the US has been pushing American firms to de-risk supply chains from China in a geopolitically charged global environment. Mehta said several Indian firms have, in fact, received Request for Quotations (RFQs) from US companies to up procurement from India.

“These RFQs explicitly require these companies to state that while they are a Tier-I supplier in India, no part of their supply chain is dependent on China. They are also reflective of the growing confidence global firms now have on India as a sourcing hub”, Mehta informed.

Overall, ACMA expects the auto component industry to grow by 8-10% in the ongoing financial year on back of robust exports and sustained domestic demand. The industry clocked revenues of Rs 7.59 lakh crore ($ 85.9 billion), which is an increase of 12.7% in rupee terms over the previous fiscal. However, for the first time in two years, the sector also posted a trade deficit of $ 1.4 billion as imports grew at a faster pace than exports from the country. China was the largest import destination accounting for 36% of all auto parts shipped into the country.

The medium- to long-term outlook for the Indian auto component industry remains positive," ACMA President Vikrampati Singhania said, adding, “Growing domestic demand, infrastructure-led economic growth, expanding manufacturing investments, deeper global integration through Free Trade Agreements and increasing global sourcing from India are creating significant opportunities for the sector,”