Page 8 - ITLN May-June 2025

Cover Story
Indian Exports

and technological intensity of the
components supplied,” Shamsher
Dewan, Senior Vice President and
Head – Corporate Ratings Group, ICRA,
wrote in the report.
If Indian exporters are forced to
absorb even 30–50% of the added
costs, it would substantially weigh
down profit margins. ICRA estimates
this could result in a 150–250 basis
point drop in margins for exporters in
FY2026. Dewan noted that select Indian
firms with manufacturing facilities
in the US may remain insulated from
these cost pressures, but they are in
the minority.
He cautioned that the new tariffs
arrive amid an already uncertain
global economic environment.
“Decline of automobile sales volumes
and tepidness in the replacement
market in the US remain the key
downside risks,” Dewan added.
Additionally, pricing pressure could
intensify in other key markets such
as Europe and Asia due to rising
competition from Chinese suppliers.
While the US tariff announcements
have raised concerns, industry leaders automotive exporters, including
believe the real impact is yet to unfold. Vietnam and Thailand,” he explained.
“There is no immediate impact on But the outcome may hinge on
Indian automotive exports to the USA,” how price dynamics evolve in the US
said Om Vijayvargiya, Head – SCM & market. “The real impact will depend on
Logistics, Schaeffler India. “Although whether US-made components become
a 10% increase in customs duty was cheaper than imports after the tariff. If
announced, its implementation has been Indian parts remain cost-competitive,
postponed for 90 days. Indian automotive exports may not decline significantly,”
exports, including vehicles and auto he said. “The tariff is applied equally
components, continue as usual.” to all types of automotive components,
“The Indian government is actively so no specific material or part is
negotiating with US authorities to disproportionately affected.”
resolve the tariff issue,” Vijayvargiya Interestingly, amid the
noted. However, he added a word In automotive, what uncertainties, there are glimmers of
of caution: “If the additional duty makes sense for us is opportunity, particularly stemming
is imposed after 90 days and no where we add more from the prolonged trade friction
resolution is reached, some impact is value, which is the between the US and China. “Yes, the
expected, but the extent will depend on ongoing US-China tariff tensions
future developments.” engines and transmission present a significant opportunity
In terms of comparative components, which are for Indian exporters,” Vijayvargiya
disadvantage, Vijayvargiya believes the heavier and have higher affirmed. “With China facing higher
playing field remains relatively level. value addition compared tariffs and potential trade restrictions,
“If the 10% tariff is implemented, to the raw material cost. Indian suppliers can capture a larger
its impact will be uniform across all share of the US market, especially if
exporting countries, as the US has Mandar Vaidya India and the US reach a favourable
applied the same rate to all major ZF Group settlement on tariffs.”
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