In a potential policy shift that may redefine India–US trade dynamics, the Indian government is contemplating a reduction—or even elimination—of import duties on automotive parts imported from the United States. The aim? To foster smoother trade ties with Washington and rebalance the tariff imbalances that have long been a bone of contention.
Currently, customs duties on US auto parts imported into India fall within a broad range of 10% to 125%. These steep levies have been a significant barrier for American exporters looking to tap into the Indian market. In 2023, India imported $212 million worth of auto parts from the US, while exporting components valued at only $115 million to the US.
However, trade experts argue that lowering or eliminating duties will not significantly harm the domestic auto component sector. The high cost of US-made parts makes them uncompetitive compared to locally manufactured alternatives. As such, Indian manufacturers are unlikely to be displaced even if duties are scrapped.This potential policy move comes amid active negotiations between New Delhi and Washington. Both governments are looking to resolve pending disputes related to tariffs and create a more favorable environment for trade expansion. A key point in the discussion is the Trump-era 25% auto tariff still in place, which India wants to see addressed.If successful, this step could mark a new chapter in Indo-US commercial ties, especially in the strategic auto and engineering sectors.
Currently, customs duties on US auto parts imported into India fall within a broad range of 10% to 125%. These steep levies have been a significant barrier for American exporters looking to tap into the Indian market. In 2023, India imported $212 million worth of auto parts from the US, while exporting components valued at only $115 million to the US.
However, trade experts argue that lowering or eliminating duties will not significantly harm the domestic auto component sector. The high cost of US-made parts makes them uncompetitive compared to locally manufactured alternatives. As such, Indian manufacturers are unlikely to be displaced even if duties are scrapped.This potential policy move comes amid active negotiations between New Delhi and Washington. Both governments are looking to resolve pending disputes related to tariffs and create a more favorable environment for trade expansion. A key point in the discussion is the Trump-era 25% auto tariff still in place, which India wants to see addressed.If successful, this step could mark a new chapter in Indo-US commercial ties, especially in the strategic auto and engineering sectors.