The Indian industry bodies are aghast at US President Donald Trump’s announcement of a further hike in tariffs on imports from India, which now total 50 per cent.
The additional 25 per cent tariff, on top of an existing 25 per cent duty, is to be levied from August 27.
Apparel exporters body, APEC, said on Tuesday the tariffs will sound the death-knell for micro, small, and medium enterprises (MSMEs), especially those heavily dependent on the American market.
“There is no way the industry can absorb this. I am sure the government also realises that this unreasonable increase in tariff will sound the death knell for the micro and medium apparel industry, especially those who majorly sell to the US market, unless the government steps in with direct fiscal support to the industry,” said Sudhir Sekhri, Chairman of Apparel Export Promotion Council (AEPC), who sought immediate fiscal support from the government.
Industry body ACMA (Automotive Component Manufacturers Association of India), which has over 1,100 manufacturers contributing more than 90 per cent of the auto component industry’s turnover in the organised sector, also expressed shock at Trump’s announcement, saying it will present near-term challenges for the auto component makers.
Also Read: ‘Indian economy contributing more to global growth than the US’
“The recent decision by the US to impose higher and additional tariffs on certain imports from India, including auto components, underscores the shifting landscape of global trade,” observed ACMA President, Shradha Suri Marwah.
Suggesting ways to cushion the blow on Indian manufacturers and exporters, ACMA representatives said the time had come for India to explore new and diversified markets.
To counter global economic headwinds, it is important to enhance our competitiveness, strengthen value-addition, and explore new trade markets, said the body on Thursday.
“This development reinforces the importance of building greater self-reliance, enhancing domestic value addition, and accelerating innovation,” Marwah said.
The US is a significant trade partner of the Indian auto components industry, having accounted for 27 per cent of the USD 22.9 billion auto components exports from India and 7 per cent of the USD 22.4 billion imports of auto components into India in FY 2024-25.
In FY2025, the combined turnover of the auto component industry stood at USD 80.2 billion, with USD 22.9 billion in exports and a trade surplus of over USD 450 million.
The US is also a key market for Indian ready-made garment exports and accounted for 33 per cent of India's total garment exports in 2024.
In 2024-25, India's exports to the US from this sector included apparel-knitted (USD 2.7 billion), apparel-woven (2.7 billion), and textiles (USD 3 billion).
“India’s presence in the US garment import market has grown, with its share increasing from 4.5 per cent in 2020 to 5.8 per cent in 2024 and ranks fourth among the top RMG exporters to the United States,” informed Sekhri.
While a 25 per cent duty was already in effect for the auto-makers sector since May 3, 2025, the additional reciprocal 25 per cent tariff effective August, 2025, is not to apply to the majority of the automotive sector as they are excluded from reciprocal tariffs.
However, even the initial 25 per cent tariff imposed on the sector puts a dent in its competitive landscape.
Set up production closer to the US
Marwah suggests a quick adjustment in India’s plans to protect its strong export growth, especially in the wake of the US being one of India’s biggest markets for auto parts in FY2025.
One way would be to actively look into setting up production closer to the US, in countries like Mexico and Canada, she said.
“Thanks to the USMCA trade agreement, Indian parts can enter the US without extra taxes if they meet certain local content rules,” Marwah said, adding that the US’ neighbouring countries makes them attractive places to move part of India’s manufacturing to serve the US market.
Expand into other markets
It is crucial now to aggressively expand other shores, suggest trade experts, a move India should have made a long time ago.
"The new trade agreement with the UK, signed recently, gives us immediate tax-free access for most auto parts, which is a big advantage. We also need to push hard for a quick trade deal with the European Union, using the success of the UK agreement to help us," she said.
India should take advantage of growing demand in developing countries in Asia, Africa, and Latin America, offering huge potential for long-term growth.
Focus on making specialised parts
In the new markets, India should turn to making high-value, special parts that are not tied to traditional engines.
"We can turn this challenge into a chance to become even more competitive globally and achieve lasting growth," she added.
Last but not least, the industry is confident that India and the US will reach an agreement soon, with a team from the US due to visit India in the last week of August to continue its trade negotiations.
"We appreciate the proactive stance of the Government of India in addressing the issue and remain hopeful that bilateral engagement will lead to constructive outcomes," Marwah said.
Follow us
