9MAY 2025Indian auto parts exporters are facing a tough road ahead, with new US tariffs threatening to wipe out Rs 2,7004,500 crore in profits, according to a report by credit rating agency ICRA. Starting May 3, 2025, a 25% import duty will hit key auto components like engines, transmissions, powertrains, and electrical parts, which make up about 65% of India's auto parts exports to the US.The US is a major market for Indian auto parts, contributing 8% of the industry's revenue in FY24. Exports to the US have been growing steadily, up 15% annually from FY20 to FY24. But the new tariffs, on top of an existing 25% duty on steel and aluminum used in auto parts, could add Rs 9,000 crore in costs to the supply chain. Indian exporters might have to absorb 3050% of these costs, cutting their operating profits by 1015%. Overall, the industry could see a 36% profit drop, ICRA predicts.These tariffs are expected to slow the industry's growth to 68% in FY26, down from an earlier estimate of 810%, with US exports likely to fall by mid-to-high single digits. Profit margins could shrink by 50100 basis points across the industry, and exporters could face an even steeper 150250 basis point hit. Thankfully, most exporters have stable finances, with over 70% of their revenue coming from domestic sales.Industry experts are hopeful but realistic. "Suppliers are negotiating to pass on costs, but success depends on their market leverage and product complexity," said Shamsher Dewan, Senior Vice President at ICRA. Firms like Samvardhana Motherson and Bharat Forge, with US-based plants, are less exposed. Looking ahead, Indian exporters might gain an edge over Chinese competitors if US tariffs on China continue, as some are already seeing more US inquiries.The Automotive Component Manufacturers Association of India is banking on India-US trade talks to find a fair solution. In the meantime, exporters are exploring cost-cutting measures and new markets to soften the blow. JINDAL INDIA INVESTS RS 100 CRORE TO ENTER STEEL PIPES AND TUBES SEGMENTUS TARIFFS THREATEN INDIAN AUTO COMPONENT EXPORTERS WITH RS 4,500 CRORE PROFIT HITJindal (India) Limited, a major player under the B.C. Jindal Group is investing Rs 100 crore to break into the steel pipes and tubes market. The company is setting up shop at its modern facility in West Bengal, aiming to make a splash in India's booming steel industry while supporting the "Make in India" campaign.This is a big shift for Jindal (India), which has been a go-to name for galvanized and color-coated steel sheets, cold-rolled steel, and API pipes since 1952. The new venture will churn out 5,000 metric tonnes of steel section pipes and tubes each month, with the company eyeing Rs 315 crore in yearly sales by FY26. The move will help Jindal grow its reach in current markets and explore new ones across the country.The B.C. Jindal Group, a USD 2.5 billion powerhouse, has been a big name in steel, packaging, and energy for over 70 years. "This investment reflects our commitment to industrial growth and innovation," said a Jindal (India) spokesperson. "By entering the steel pipes segment, we aim to meet rising infrastructure demands and contribute to India's economic development." The new pipes will be used in everything from oil and gas to highways and safety barriers.Industry insiders say this is a smart play, given India's push for better roads, bridges, and cities. The project is also expected to create jobs and support India's goal of producing more of its steel.Jindal (India) has a strong network of dealers and customers worldwide, built on the vision of its founder, Shri B.C. Jindal. This latest move shows the company is ready to adapt and thrive in a fast-changing market. With this investment, Jindal is not just expanding its business--it's helping build a stronger, self-reliant India.
<
Page 8 |
Page 10 >