India’s $80 billion auto component industry is actively recalibrating its global strategy, deepening ties with China for cutting-edge technologies amid shifting geopolitical dynamics. During its 65th annual session, the Automotive Component Manufacturers Association of India (ACMA) underscored a dual focus: international collaboration and domestic innovation in response to an evolving global landscape.
The recent thaw in Indo-China relations is being viewed as a pivotal opportunity. ACMA leaders emphasized that China — currently India’s largest source of auto component imports — is a “treasure trove” of technologies critical to the next era of mobility.
Industry stakeholders anticipate a surge in joint ventures and partnerships with Chinese firms, framing the relationship as a “win-win.” For India, this means access to advanced capabilities — particularly in areas where China is perceived to be “25 years ahead” in automotive innovation. For Chinese companies, India offers not only a vast, rapidly growing market — often described as “China was 10 years ago” — but also a vital alternative as U.S. markets become increasingly inaccessible due to trade restrictions.
“We’re seeing more thawing of ice,” said Vinnie Mehta, Director General of ACMA. “You’ll find a lot of collaborations emerging.”
Meanwhile, Indian manufacturers face significant pressure from the U.S., which accounted for $6.6 billion in auto component exports last fiscal year. Of this, approximately $3.5 billion worth of parts for cars and light trucks now face duties of 25% plus an additional 2.5% surcharge. Another $3 billion in components for commercial vehicles, off-road equipment, tractors, and construction machinery is subject to a steep 50% reciprocal tariff.
While early data from Q1 (April–June) showed no immediate decline in exports to the U.S., industry leaders acknowledge “some stalling” and expect clearer trends to emerge in the coming quarters.
When asked whether U.S. buyers might shift sourcing away from India — especially for high-tariff items — Shradha Suri Marwah, President of ACMA, responded: “Supply chain shifts aren’t overnight decisions. These are highly specialized products with entrenched investments, rigorous testing protocols, and long certification cycles. Second, companies came to India precisely because they wanted diversified, global supply chains. Rebuilding that elsewhere will take time — so it’s painful for both sides.”
Despite these challenges, the industry remains resilient. The $6.6 billion exposure to the U.S. market represents less than 10% of India’s total $80 billion auto component turnover — leaving ample room to pivot toward other destinations. Strategies include enhancing operational efficiency, optimizing sourcing networks, and leveraging government incentives through production-linked incentive (PLI) schemes and expanded Free Trade Agreements (FTAs).
Of particular importance is the potential FTA with the European Union — a market nearly equal in size to the U.S., with bilateral auto component trade standing at $6.7 billion in exports from India and $5.7 billion in imports. This near-balance creates strong momentum for lowering barriers and fostering deeper collaboration.
The EU’s industrial base, dominated by small and medium enterprises (SMEs), mirrors India’s own sectoral structure — making joint ventures with European SMEs a natural fit. While India seeks technology transfers from Europe, it is also proactively preparing for the EU’s Carbon Border Adjustment Mechanism (CBAM), a carbon levy on imports deemed carbon intensive.
ACMA recognizes CBAM as a potential “trade barrier,” particularly for SMEs, but is actively running cluster programmes and education programmes to ensure industry compliance, with the government also engaged in negotiations, the ACMA officials continued.