New Delhi: In response to the recent imposition of reciprocal tariffs by the United States, the Society of Indian Automobile Manufacturers (SIAM) has issued a reassuring statement, asserting that the move is unlikely to cause significant disruption to the Indian automobile sector. This clarification comes as a relief to industry stakeholders, including automotive manufacturers, exporters, and consumers, who were growing increasingly concerned about the potential fallout from escalating global trade tensions.
The U.S. government recently announced a new wave of retaliatory tariffs on selected imported goods from several nations, including India. These tariffs are said to be a response to what U.S. officials have described as “unfair digital services taxes and discriminatory trade practices” imposed by other countries on American technology firms. The move sparked apprehensions across multiple sectors globally, raising fears of a broader trade conflict.
However, SIAM has emphasized that the Indian automobile industry’s direct exposure to the U.S. market—particularly in terms of vehicle exports—is relatively limited. As a result, the impact of these tariffs on the overall performance and growth trajectory of the domestic automotive industry is expected to be minimal.
Limited Exposure to U.S. Market Shields Indian Auto Sector from Tariff Impact
The Society of Indian Automobile Manufacturers (SIAM) has emphasized that the Indian automotive industry’s limited engagement with the U.S. market serves as a critical buffer against the recently announced reciprocal tariffs by Washington. According to SIAM, India’s exports of fully built vehicles, or Completely Built Units (CBUs), to the U.S. are negligible when compared to its shipments to other global markets.
India’s automobile export landscape is largely concentrated in regions like Africa, Latin America, South Asia, and the Middle East—markets that offer high growth potential and relatively lower regulatory barriers. These regions collectively account for the bulk of India’s auto exports, particularly in the two-wheeler and small passenger vehicle segments.
“There is no significant volume of CBUs or even CKDs (Completely Knocked Down kits) being exported to the U.S. from India. Hence, the impact of these tariffs is negligible for Indian OEMs,” a SIAM spokesperson clarified. The statement reflects the long-standing strategic choice of Indian manufacturers to prioritize cost-sensitive and growing markets over highly saturated and regulation-heavy Western economies.
Two-Wheelers and Passenger Vehicles: India’s Export Backbone Remains Unshaken
India’s two-wheeler industry is the backbone of its automobile export ecosystem, and this segment remains completely insulated from the U.S. tariff announcement. Leading Indian manufacturers like Bajaj Auto, TVS Motor Company, and Hero MotoCorp have built expansive supply chains and distribution networks in Africa, South Asia, and Latin America. These companies export millions of motorcycles and scooters annually, often tailored to suit the affordability and fuel efficiency needs of developing nations.
For instance, Bajaj Auto is among the top two-wheeler exporters in the world and has a strong foothold in Nigeria, Colombia, and Bangladesh. Similarly, TVS has consistently expanded its international footprint through partnerships and CKD assembly units in countries like Kenya, Egypt, and Indonesia. Hero MotoCorp, known for its commuter bikes, has been expanding aggressively in Central America and parts of Africa, regions that mirror India’s demand profile.
On the passenger vehicle front, carmakers like Maruti Suzuki, Hyundai Motor India, and Tata Motors have focused their export efforts toward markets in the Middle East, Latin America, and Europe. Maruti Suzuki, for instance, ships vehicles to over 100 countries and recently crossed 3 million vehicle exports. Tata Motors, which has made significant strides in electric vehicle innovation, exports to countries such as South Africa and Nepal. Hyundai, with its vast production base in India, continues to supply to markets like Mexico and Chile from its Indian plants.
Even in the case of Indian automakers with a presence in North America—like Mahindra & Mahindra—the business model is designed to avoid exposure to tariffs. Mahindra operates through local manufacturing or assembly setups in the U.S., such as its facility in Auburn Hills, Michigan, used for off-road utility vehicles. This allows the company to serve niche markets without being dependent on cross-border exports, thereby sidestepping direct tariff implications.
In essence, the Indian automobile industry’s diversified export orientation and strategic localization efforts have significantly shielded it from the fallout of the U.S.’s tariff measures. By maintaining a minimal dependency on North America and focusing on fast-growing regions, Indian OEMs continue to build global resilience.
Focus on EV Components and Tech Transfer: Experts Urge Vigilance
While the immediate impact of the U.S. reciprocal tariffs on India’s vehicle exports appears minimal, industry experts have pointed out a potential area that warrants closer scrutiny—India’s Electric Vehicle (EV) ecosystem. As the country embarks on an ambitious transition towards clean mobility, the global supply chain for EV components and high-end technology collaborations could emerge as a more sensitive domain within the broader India–U.S. trade relationship.
Though current trade volumes of EV-related components between India and the U.S. are relatively low, India’s growing reliance on foreign technology for electric powertrains, battery management systems, advanced sensors, and semiconductors means that any shift in trade policy or diplomatic stance could influence long-term partnerships. Access to American EV innovation—especially in areas like autonomous driving software, battery chemistry R&D, and AI-enabled vehicle management systems—could be vital for Indian automakers aiming to stay globally competitive.
However, the Society of Indian Automobile Manufacturers (SIAM) downplayed immediate concerns, clarifying that the majority of EV components currently imported into India are sourced from China, South Korea, Japan, and select European nations. These countries dominate the global battery cell manufacturing, electronics, and electric motor markets, ensuring that the current U.S. tariff action is unlikely to disrupt critical EV supply chains in the short term.
“The EV industry in India is still heavily reliant on imports from East Asia, particularly for lithium-ion batteries and key electronic control units. The U.S. has not yet become a dominant supplier in this segment for India, so there’s little immediate cause for concern,” noted a senior analyst at a leading mobility think tank.
Nonetheless, experts agree that as India’s EV industry matures and seeks to reduce its dependence on China by diversifying sources of advanced tech and materials, collaborations with U.S.-based clean tech firms could become strategically important. In that context, maintaining stable and open trade channels with the U.S. will be crucial for India’s long-term EV ambitions.
The ongoing tariff developments, therefore, serve as a timely reminder for policymakers and manufacturers to future-proof supply chains, encourage local manufacturing of critical components, and foster bilateral innovation ties in the electric mobility sector.
Policy and Trade Outlook: Navigating Symbolism and Strategic Priorities
As geopolitical tensions and economic nationalism continue to influence global trade policies, industry experts suggest that the recent tariff measures imposed by the United States should be viewed more as symbolic gestures rather than indicators of deeper economic rifts—at least for now. The U.S. action, largely driven by domestic political considerations and concerns over digital taxation, is not expected to significantly alter the trajectory of Indo-U.S. trade in the automotive sector.
India, meanwhile, continues to prioritize foreign direct investment (FDI) and technological self-reliance under its flagship “Make in India” initiative. As part of this broader economic strategy, policymakers are keen to attract global automotive and EV manufacturers to set up localized production units, R&D centers, and supply chains within the country.
“India and the U.S. share strategic interests in clean energy, mobility, and technology transfer. These temporary tariffs are more political than practical in their impact on automotive trade,” said Rahul Mishra, Trade Analyst at the Observer Research Foundation (ORF). He further noted that both countries stand to benefit from increased collaboration in future-facing industries such as electric mobility, semiconductor manufacturing, and sustainable transportation solutions.
While the current tariff episode may not shake the foundations of the automotive relationship, it underscores the need for predictable and transparent trade policy frameworks. Such stability is essential to fostering long-term confidence among investors and manufacturers on both sides.
Conclusion: Indian Auto Industry Remains Resilient Amid Trade Shifts
The Society of Indian Automobile Manufacturers’ (SIAM) assessment of the U.S. tariff situation paints a largely resilient and optimistic outlook for the Indian automotive sector. Despite ongoing global trade developments, the industry remains largely insulated due to its limited export exposure to the United States, strategic market diversification, and strong localization of production and supply chains.
While other sectors may feel the tremors of retaliatory tariffs and shifting trade alignments, the Indian auto industry—particularly its two-wheeler and small passenger vehicle segments—continues to ride on the back of robust demand from emerging economies and steady innovation at home.
Conclusion: Indian Auto Industry Remains Resilient Amid Trade Shifts
The Society of Indian Automobile Manufacturers’ (SIAM) assessment of the U.S. tariff situation paints a largely resilient and optimistic outlook for the Indian automotive sector. Despite ongoing global trade developments, the industry remains largely insulated due to its limited export exposure to the United States, strategic market diversification, and strong localization of production and supply chains.
While other sectors may feel the tremors of retaliatory tariffs and shifting trade alignments, the Indian auto industry—particularly its two-wheeler and small passenger vehicle segments—continues to ride on the back of robust demand from emerging economies and steady innovation at home.
Looking ahead, continuous diplomatic engagement between Indian and U.S. trade authorities will be vital. Maintaining open lines of communication and reinforcing mutual interests in clean mobility, advanced manufacturing, and technology collaboration will be key to ensuring that short-term trade skirmishes do not derail long-term opportunities.
With electric mobility, digitalization, and green infrastructure forming the next frontier of global transportation, India’s ability to remain adaptive, outward-looking, and collaborative will determine its standing in the evolving global automotive landscape.
For more insights on India’s EV policy and global trade strategy, visit Invest India’s official page.
For more real time updates, visit Channel 6 Network.
