India's auto parts exports to the United States remained robust in fiscal year 2025-26, even as the Office of the United States Trade Representative (USTR) investigates alleged unfair trade practices, according to data from the Automotive Component Manufacturers Association (ACMA).
US remains top destination despite tariff risks
The United States accounted for 26% of all auto components exported from India in FY26, followed by Germany (9%) and Thailand (4%), as per ACMA data reported by the Economic Times. Total auto component exports from India rose by 5% to $24 billion in FY26.
Nearly half of auto parts exported from India to the US attract a tariff of 25%, while the remaining 12.5% – those currently under USTR investigation – are subject to the lower rate.
USTR Section 301 investigation underway
The USTR is conducting a Section 301 investigation into Indian auto parts exporters on two counts: alleged unfair labour practices and creation of excess capacity backed by government subsidies. India is among 16 countries being investigated. The next hearing is scheduled for later this month.
Vinnie Mehta, Director General of ACMA, refuted the allegations, stating, “If we had overcapacity why would the industry be investing now in expanding production? The auto component industry does not get any subsidy from the government. In fact, out of the 1100 members at ACMA, only two have received disbursements under the PLI (Production Linked Incentive) scheme.”
“If we had overcapacity why would the industry be investing now in expanding production? The auto component industry does not get any subsidy from the government.” – Vinnie Mehta, ACMA
US firms de-risking from China boost Indian sourcing
Despite the investigation, US companies are actively seeking to reduce dependence on China. Mehta noted that several Indian firms have received Request for Quotations (RFQs) from US companies to increase procurement from India. These RFQs explicitly require suppliers to confirm that no part of their supply chain is dependent on China.
“These RFQs explicitly require these companies to state that while they are a Tier-I supplier in India, no part of their supply chain is dependent on China. They are also reflective of the growing confidence global firms now have on India as a sourcing hub,” Mehta said.
Industry outlook: growth and trade deficit
ACMA expects the auto component industry to grow by 8-10% in the current financial year, driven by robust exports and sustained domestic demand. The industry clocked revenues of Rs 7.59 lakh crore ($85.9 billion), an increase of 12.7% in rupee terms over the previous fiscal.
However, for the first time in two years, the sector posted a trade deficit of $1.4 billion as imports grew at a faster pace than exports. China was the largest import source, accounting for 36% of all auto parts shipped into India.
| Trade Metric | FY26 Value | Change vs Previous Fiscal |
|---|---|---|
| Exports | $24 billion | +5% |
| Imports | $25.4 billion (estimated) | Faster growth rate |
| Trade Deficit | $1.4 billion | First in two years |
Vikrampati Singhania, ACMA President, said the medium- to long-term outlook remains positive, citing “growing domestic demand, infrastructure-led economic growth, expanding manufacturing investments, deeper global integration through Free Trade Agreements and increasing global sourcing from India.”
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