India is evaluating the possibility of reducing or completely removing customs duties on auto parts imported from the United States, a senior government official confirmed. The current customs duty on imported auto components ranges between 10 per cent and 15 per cent, with an average of 11 per cent.
“There is consensus that the domestic industry will not be impacted by imported US auto components,” the official stated, adding that high-cost American parts are unlikely to compete with Indian-made components even if import duties are scrapped.
This move is part of broader trade negotiations with Washington, particularly in light of the Trump administration’s 25 per cent auto tariff proposal. India has been actively considering duty cuts on certain products it exports to the US but does not import in large volumes.
Bilateral Trade Agreement (BTA) and Industry Impact
Recent trade discussions between Indian and US officials have primarily focused on automotive components rather than entire vehicles. Both nations have reached a preliminary understanding on key elements of a potential Bilateral Trade Agreement (BTA), aiming to finalise the first phase by autumn 2025.
India currently exports approximately $7 billion worth of auto parts to the US annually, representing about one-third of its total auto component exports. In contrast, imports of US auto parts stand at around $1.5 billion per year. Sectoral expert-level engagements under the BTA are expected to commence virtually in the coming weeks.
According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto component industry grew by 9.8 per cent to $74.1 billion in FY24. Domestic component supply accounted for $62.4 billion, with the electric vehicle (EV) sector contributing 6 per cent to total production.
With both nations keen on strengthening trade ties, India’s potential reduction in customs duties on US auto parts could pave the way for a more balanced and mutually beneficial agreement.
