By Nitin Waghela

Copyright republicworld

The US tariffs imposed on India are expected to impact 8 per cent of the south Asian nation’s auto components exporters in the backdrop of fresh bilateral trade talks brewing between both nations, according to Investment Information and Credit Rating Agency (ICRA).ICRA has noted that Indian auto component exporters are at a relative disadvantage compared to most other Asian exporting nations, highlighting the pertinence of concluding an India-US Bilateral Trade Agreement (BTA).India’s auto component exports contribute nearly 30 per cent to the industry’s revenues, with the US alone accounting for 27 per cent of this share.The cumulative imposition of 25 per cent tariffs on Indian goods places auto component exporters to loose its competetive edge as against Asian competitors such as Japan, China, and Indonesia, who face lower levy in the range of 15 – 30 per cent.Further, manufacturers in Mexico and Canada remain exempt under the United States-Mexico-Canada Agreement (USMCA), further intensifying competitive pressures on Indian exporters, it said.Exporters dependent on the US are trying to diversify their revenue base across other geographies including Asia. Measures to improve value addition, diversification into non-auto segments and cost-optimisation strategies are also being undertaken, in addition to negotiations with supply chain partners.Exports of auto components from India to the US have been rising steadily, moving from USD 4.1 billion in FY2021 to USD 6.0 billion in FY2022, USD 6.5 billion in FY2023, and USD 6.8 billion in FY2024, and are estimated to reach USD 7.3 billion in FY2025.Geography-wise, exports comprise 29 per cent of India’s auto component industry, with domestic sales accounting for 56 per cent and replacement demand for 15 per cent.Coming to auto component exports from India, Europe accounts for 30 per cent, the US for 27 per cent, and Asia for 26 per cent, Latin America for 3 per cent, and other regions for 13 per cent.