The US government’s move to impose a 25% tariff on Indian exports, effective August 27, is set to significantly impact India’s auto sector. With tariffs reaching approximately 50%, MSMEs, which contribute a large portion of India’s exports, are expected to face considerable challenges. The auto component industry, valued at $80.2 billion, is at risk. A 25% duty will be levied on items such as engines and drivetrains, while other components will face a 50% tariff. The tyre sector will feel the impact, especially in the replacement market. Jaguar Land Rover, with a considerable stake in the US market, is particularly vulnerable. These tariffs may hinder India’s attempts to benefit from the China+1 strategy, as companies may find it difficult to shift supply chains due to high duties.
