Impact Of Trump Tariffs On India’s Auto Sector, Predictions For Industry’s Future News24 –

A recent change in the Trump administration has laden Indians under significant pressure to ease the tariffs on imported cars. India has been ok with the reduced tariffs on the imported cars, a full-on reduction and dismissal of the duties is not currently on the cards. A report by Reuters has further indicated that the Indian Government has been cautious about such an immediate reduction to zero. As per the reports, there are prospects of India discussing the possible bilateral trade deal, which would lead to the arrival of newer American cars in India. 

As per international reports, there have been analyses that indicate that even if the duties were to be reduced to zero there would be no sizeable impact on the Indian market. As per Nomura, this is because the duty differentials are not large and the risk of import is too low.  The report further elucidated how the increasing tariffs on countries such as Mexico, Canada and China may in fact, benefit the Indian exporters in gaining further shares.

How Can India Benefit

As per the Nomura report a few US based manufacturers have already exited the Indian market considering that their models are not the most relevant in the Indian Diaspora. As per the Nomura report the Indian market can benefit from the current spread by lowering the car duties that are being imported from the us markets. But this should be continued only till the the international users take advantage of the system and dump the market with cars that have been produced in even lower-cost production companies such as Mexico, or China. 

The Nomura report recognizes the headway India has been able to access in producing auto component products such as EV differentials, bevel gears, and crankshafts. The report recognizes the rising share of India’s automotive products. The further lower wage of production-related workforce in India compared to that of Mexico and Us further improves its possible position as a haven for automotive production or a market for us in teh upcoming years. 

Current Landscape 

As of yet, Us charges approximately 2.5% tariff on imports from India, on the other hand, Indian charges a stiff 110% on fully built cars and around 15% on auto parts. Beyond that the two-wheelers US charge 2.4% import duty while India imposes a higher duty of 70%. the high tariffs have been able to give the budding and developing indigenous manufacturers to gain a lead. Tariff reduction can further increase the competition in the nation, pitting local manufacturers against international brands. While the report recognizes that there would be no repercussions of a reduction in trade tariffs it can lead to stiff competition for the local part manufacturers as well as car manufacturers in the long run. How would the nation combat such a situation is as of yet very unclear.