What India's rising dependence on China says about the trade deficit of the auto component industry
India's auto component industry reported a trade deficit of $1.37 billion in FY26 after a trade surplus of $453 million in FY25
- Jul 7, 2026,
- Updated Jul 7, 2026 3:19 PM IST
India’s automobile component imports rose 13% year-on-year to $25.4 billion for the financial year 2025-26 as the auto parts industry reported a trade deficit of $1.37 billion in FY26 compared with a trade surplus of $453 million in FY25.
About $9.14 billion worth of imports came from China, according to the industry’s FY26 performance review shared by the Automotive Component Manufacturers Association of India (ACMA).
China accounted for 36% of India’s auto component imports in FY26, up from 32% in the previous financial year, the data showed.
“This year, the imports from China have grown,” says Vinnie Mehta, Director General, ACMA. “There is no denying that a whole lot of imports happen out of China.”
The rise in auto parts imports from China comes amid growing sales of electric vehicles.
There is a lot of push for localisation by the government.
To be clear, ACMA’s import figures do not include lithium-ion cells or batteries for EVs. It includes electronics and components of batteries, says Mehta. “EV value chain is not localised. Also, there is a huge uptick in electronics content in vehicles. That also leads to more imports,” he explains.
“Last year, more than half of the 30 million cars that China produced were EVs. So, their supply chain in EVs is most price competitive,” says Mehta.
“For localisation, the industry needs to have a critical mass of volumes. We are reaching there. Hopefully, you will find a lot of localisation in the coming few years,” he believes.
India’s auto component exports rose 5% year-on-year to $24 billion. While exports to North America remained flat amid challenges such as tariffs, Europe recorded the strongest growth.
“We continue to face challenges on tariffs. Half of what we supply to the US stands at 25% tariff, and the other half is at 12.5%,” said Mehta.
Adding to the industry’s worries, the US has launched an investigation into Indian auto component exports that attract a 12.5% tariff under Section 301. ACMA has been representing the industry at the United States Trade Representative (USTR).
“I travelled to the US in April. I am also likely to travel this month, where there are two investigations on labour and excess capacity due to government subsidies. The Indian government has refuted these,” says Mehta.
Despite high tariffs to the US in FY26, exports have remained consistent.
India’s automobile component imports rose 13% year-on-year to $25.4 billion for the financial year 2025-26 as the auto parts industry reported a trade deficit of $1.37 billion in FY26 compared with a trade surplus of $453 million in FY25.
About $9.14 billion worth of imports came from China, according to the industry’s FY26 performance review shared by the Automotive Component Manufacturers Association of India (ACMA).
China accounted for 36% of India’s auto component imports in FY26, up from 32% in the previous financial year, the data showed.
“This year, the imports from China have grown,” says Vinnie Mehta, Director General, ACMA. “There is no denying that a whole lot of imports happen out of China.”
The rise in auto parts imports from China comes amid growing sales of electric vehicles.
There is a lot of push for localisation by the government.
To be clear, ACMA’s import figures do not include lithium-ion cells or batteries for EVs. It includes electronics and components of batteries, says Mehta. “EV value chain is not localised. Also, there is a huge uptick in electronics content in vehicles. That also leads to more imports,” he explains.
“Last year, more than half of the 30 million cars that China produced were EVs. So, their supply chain in EVs is most price competitive,” says Mehta.
“For localisation, the industry needs to have a critical mass of volumes. We are reaching there. Hopefully, you will find a lot of localisation in the coming few years,” he believes.
India’s auto component exports rose 5% year-on-year to $24 billion. While exports to North America remained flat amid challenges such as tariffs, Europe recorded the strongest growth.
“We continue to face challenges on tariffs. Half of what we supply to the US stands at 25% tariff, and the other half is at 12.5%,” said Mehta.
Adding to the industry’s worries, the US has launched an investigation into Indian auto component exports that attract a 12.5% tariff under Section 301. ACMA has been representing the industry at the United States Trade Representative (USTR).
“I travelled to the US in April. I am also likely to travel this month, where there are two investigations on labour and excess capacity due to government subsidies. The Indian government has refuted these,” says Mehta.
Despite high tariffs to the US in FY26, exports have remained consistent.