Informist, Friday, Sept. 12, 2025

NEW DELHI – The automobile components industry is looking to deepen its relationship with businesses in the European Union to increase opportunities as India reels under the 50% tariff imposed by the US on goods imported from the country, members of the Automotive Component Manufacturers Association told reporters at a press conference Friday. The automotive lobby group said India has to continue to build on its free trade agreement plans, which will make the industry more competitive at the global level.

Having already signed a free trade agreement with the UK, India is now rushing to conclude a similar pact with the 27-nation bloc. Earlier this week, Commerce and Industry Minister Piyush Goyal said nearly two-thirds of the deal had been worked out. "The EU FTA is hugely important for us because the European Union is as huge a market as the US," said ACMA Director General Vinnie Mehta. "And now, with the US market under a cloud, we would like to deepen our engagement with the European Union."

ACMA expects more technologies, joint ventures, and investments into India once the free trade pact with the EU is finalised. "The European Union is also a huge treasure house of a lot of technologies," Mehta said. "We would like technology investments into the country from Europe."

Exports are key for Indian auto ancillary companies. Exports by Indian automobile component manufacturers grew 8% on year to $22.9 billion in the financial year 2024-25 (Apr-Mar). Of these, exports to North America stood at $7.4 billion. Exports to Europe stood at $6.8 billion.

Indian companies exported components worth $6.6 billion to the US in FY25. "The turnover of our industry is $80 billion and exposure to the US is $6 billion," Mehta said. "I'm not belittling the impact of this (US tariffs on India), (but) it's not as humongous."

Given the external pressures, ACMA President-designate Vikrampati Singhania said Indian companies should also look inwards and make processes more efficient, improve sourcing, mitigate risk better, and improve cost structures.

The Goods & Services Tax Council recently rejigged tax rates across the board to give a fillip to muted consumption trends. The automobile industry is seen to be a key beneficiary of the revision. "In the auto components space, 60% of our components were at one tariff rate, 40% were at another tariff rate. Now, it's all uniform, they removed all the anomalies," said ACMA President Shraddha Suri Marwah.

The rationalisation of GST rates has caused an upswing in demand in the automobile components space as well. "Just as the festive season hits us starting Sept. 22, they (dealers) are saying bookings are actually robust," Marwah said.

On the continuing shortage of rare-earth magnets, Mehta said companies are working to develop competencies elsewhere given the dearth of short-term solutions. "We were expecting that the industry would come to a grinding halt in light of heavy rare earths not being available," Mehta said. "But we are trying to overcome it through alternate solutions using lighter rare earths." End

Reported by Anand JC

Edited by Rajeev Pai

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