Auto components sector clocks 12.7% growth; U.S. exports hold firm despite tariffs

India’s auto parts industry grew 12.7% in FY26 to reach a turnover of ₹7.6 lakh crore, while exports to the US remained stable despite 25% and 50% tariffs imposed on different categories of auto parts.

Exports to the U.S. are valued at $7.3 billion for fiscal year 2025-2026, with zero growth, or remaining “as is,” Auto Component Manufacturing Association Executive Director Vinnie Mehta said at a news conference.

About half of India’s automotive component exports to the US are subject to a 25% duty under Section 232 of the US Trade Expansion Act of 1962, while the remaining half faces a reciprocal duty of 50%. India will also be investigated for labor practices, industrial overcapacity and unfair subsidies to domestic industries.

ACMA said the sector’s annual performance was “driven by strong domestic demand, higher vehicle production, sustainable investments in capacity and technology, and steady export growth despite an increasingly uncertain global environment.”

Supplies to original equipment manufacturers (OEMs) increased by 16.3% during the year, driven by higher vehicle production across segments including passenger vehicles (10%), commercial vehicles (13%) and two-wheelers (12%). The aftermarket expanded by 9%, thanks to a growing vehicle base and increased market formalization, while exports increased by 5% and imports by approximately 13%. Supplies to the electric vehicle segment constituted 4.6% of total OEM sales.

President of the Association, Vikrampati Singhania, said that labor shortage and raw material costs are among the negativities faced by the sector. He attributed the labor shortage to the high cost of living in urban centers since the Gulf War, which caused many workers to return to their villages. Seasonal factors such as harvest season, elections and adverse weather conditions have also further increased reverse migration from cities.