US tariffs more biased against Indian automotive and tyre industries as compared to Asian peers, says ICRA

The US government has imposed 25 per cent tariff on Indian export. This move places the Indian auto component industry and tyre manufacturers in an unfavourable position as compared to the peers in other Asian countries like Japan, Vietnam, Indonesia - as these countries face lower tariffs from the US.

Rating agency ICRA said this after the US administration has announced the imposition of a tariff on all goods being exported from India from August 7. The agency stated that imposition of a 25 per cent tariff by the US on Indian imports has raised concerns across India's automotive and tyre industries, both of which maintain substantial export exposure to the US market.

The US accounts for 27 per cent of India's auto component exports and 17 per cent of tyre exports. With this the tariff hike places Indian manufacturers at a disadvantage compared to Asian peers such as Japan, Vietnam, and Indonesia, which face lower or preferential duties, Icra said. It also stated that the increased tariffs could dent the competitiveness of Indian suppliers, especially in off-highway and replacement tyre segments, and across various automotive components.

While Indian tyre exporters previously enjoyed a modest advantage over Chinese competitors, that edge may now be offset by the lower tariff rates granted to other Southeast Asian nations. Auto component exporters, particularly those heavily reliant on the US market, are expected to diversify their geographies and improve cost efficiencies to lessen the impact, ICRA further said.

In FY2025, the Indian auto components industry reported a turnover of $80.2 billion, which is equivalent to ₹6.73 lakh crore, marking a growth of around 10 per cent as compared with FY2024. Exports of auto components from India grew by eight per cent to $22.9 billion, equivalent to ₹192,346 crore in FY2025 from $21.2 billion, which translates to ₹175,960 crore in FY24.

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