Auto-Parts Makers Brace for Profit Squeeze as US Tariffs Bite

India’s auto-component industry is facing mounting pressure as recent US tariff hikes threaten margins for exporters. With the US accounting for roughly a quarter of India’s parts exports, increased import duties are expected to shrink profits—especially for small and medium enterprises. In automotive hubs across Tier 2 cities, this development could impact livelihoods, supply chains, and business forecasts.

India exported nearly $7 billion worth of auto components to the US in 2024. Of this, $3.6 billion in car and truck parts now attracts a 25% duty. The remaining $3 billion—covering tractor, construction, and farm equipment parts—is hit hard by 50% reciprocal tariffs. Together, analysts estimate around 15–20% of such exports could be affected in the short term.

For MSME exporters, the impact is immediate. Take the case of an aluminium casting firm in Pune that ships 60% of its output to the US. With buyers demanding tariff sharing, profit margins face steep decline. Another machine component maker noted that while US clients value quality, escalating landing costs may force them to explore cheaper alternatives.

Larger players, especially those supplying global auto brands, may adapt more easily. But small units concentrated in Tier 2 industrial belts—like Pimpri-Chinchwad and Bhosari—may struggle to regain footing without support or strategy shifts.

For towns dependent on auto-part clusters, this shock brings uncertainty. Contract delays, renegotiations, or cancellations could affect workers and local economies.

Conclusion
The latest tariff move by the US signals a clear warning for India’s auto-component sector. As the profit squeeze deepens, especially for small exporters, resilience will depend on agility. Diversifying markets, renegotiating contracts, and value-added manufacturing may be the industry’s best path forward in navigating global headwinds.