ACMA India Auto Component Trade Deficit Worsens Under US Tariffs

India’s auto component sector moved back into a trade deficit in the first half of FY2026 as fresh US tariffs slowed export momentum while imports, especially from China, accelerated sharply. The ACMA India auto component trade deficit widened despite steady overseas demand, reflecting how policy changes can quickly reshape global automotive supply chains.
Data released by the Auto Component Manufacturers Association showed the industry generated US$41.2 billion in revenue between April and September 2025, marking a 3.5 percent year-on-year increase. Growth was driven mainly by domestic demand and non-US export markets, even as tariff barriers limited expansion into North America.
ACMA India Auto Component Trade Deficit Driven by Import Surge
Exports of auto components climbed 9.3 percent to US$12.1 billion, but imports grew faster at 12.5 percent to US$12.3 billion. This imbalance resulted in a trade deficit of roughly US$200 million, reversing the surplus seen a year earlier when the sector posted a positive balance of US$150 million.
ACMA Director General Vinnie Mehta said that although exporters managed to grow despite external pressures, the balance of trade deteriorated compared to last year. The ACMA India auto component trade deficit highlights how import growth, especially from Asia, outpaced export gains during the period.
US Tariffs Keep North American Exports Flat
While shipments to Europe, Africa, and Asia recorded healthy expansion, exports to North America remained largely unchanged at US$3.67 billion. Supplies to the US edged up only marginally, as new tariff measures limited the ability of Indian suppliers to win additional orders.

• Auto components shipped from India to the US are now subject to a flat 25 percent tariff.

Previously, about 55 percent of exports, mainly passenger vehicle parts, fell under Section 232 duties, while commercial vehicle and off-highway components faced even higher reciprocal tariffs that, in some cases, reached 50 percent before being unified under the new rate.
A clarification issued on November 1 removed these higher slabs and placed all categories under the single 25 percent duty, but the uncertainty in the months leading up to it had already slowed contract decisions and new sourcing activity.
China Imports Add Pressure to Trade Balance
Imports from China rose to US$4.05 billion, up from US$3.27 billion a year earlier, reflecting both pricing advantages and supply chain adjustments caused by raw-material restrictions in other regions.
Overall imports from Asia increased by US$1.1 billion, a key factor behind the widening ACMA India auto component trade deficit, even as export performance outside North America remained positive.
New Contracts on Hold Despite Stable Shipments
ACMA President Vikrampati Singhania said that while current supply lines to the US are continuing, new business from North America is being delayed. Buyers in the US and the broader NAFTA region are cautious about committing to new projects because of tariff uncertainty and shifting trade policies.
He noted that although exports to North America stayed almost flat, the rest of the world delivered around 10 percent growth, showing that demand for Indian auto parts remains strong where tariff barriers are lower.
Tariff Gaps Put India at a Competitive Disadvantage
ACMA officials also pointed out that some competing countries have secured more favourable tariff treatment under Section 232, leaving Indian suppliers at a cost disadvantage. Even a 10-percentage-point difference in duty rates can change sourcing decisions, as margins in the auto component industry are typically thin.
President-designate Sriram Viji warned that unless there is clarity or a resolution on US trade policy, challenges will persist. He added that Europe is showing signs of recovery this financial year, offering some relief for exporters seeking to diversify away from the US market.