As trade tensions between the US and China continue, global automakers are likely to seek alternative suppliers, potentially benefiting Indian auto component manufacturers, according to a report by Nomura, cited by news agency ANI.
The report notes that rising tariffs on Chinese imports are expected to raise vehicle prices in the US, which may dampen short-term demand. However, this could prompt global Original Equipment Manufacturers (OEMs) to diversify their supply chains. “Indian auto part suppliers may stand to gain as OEMs look for reliable alternatives,” the report claimed.
While Indian manufacturers could benefit from this shift, the US continues to impose a 25 per cent tariff on Indian automobiles and auto components under President Donald Trump’s reciprocal tariff regime. These duties affect a range of products including wire harnesses, seat components, tyres, fuel pumps, vehicle bodies, bumpers, and cockpit electronics.
In 2023, China exported auto parts worth $11 billion to the US, compared to India’s $2 billion, highlighting a significant opportunity for growth.
The report also cautions about broader economic risks. “Discretionary consumption in India could come under pressure if the tariff war escalates, particularly in the context of weakening US growth,” it added, noting the potential impact on consumer sentiment.
Amid these dynamics, the US administration has introduced a 90-day suspension of tariffs for countries open to trade discussions—excluding China. India is actively pursuing a bilateral trade agreement (BTA) with the US, with a conclusion expected by fall 2025. “Finalising the BTA would further enhance India’s competitive positioning,” the report said, interpreting the temporary tariff pause as a sign of the Trump administration’s openness to negotiation.
Despite the likelihood of continued trade friction beyond the 90-day window, Nomura claimed that India-US trade talks, free from significant trade deficit tensions, could help mitigate long-term risks and open up fresh opportunities for Indian exporters.
