New auto component orders from US in limbo after Trump tariffs: ACMA

US automakers have deferred new orders from Indian auto component makers following the imposition of 50% tariffs by US President Donald Trump last year, according to the Automotive Component Manufacturers Association of India (ACMA).

“New contracts from the US are in limbo even as existing supply chains continue,” Vikrampati Singhania, President of ACMA and Managing Director of J K Fenner (India) Ltd, said on Wednesday.

Singhania added that the depreciation of the Indian rupee versus the US dollar has cushioned some of the impact.

There are challenges with respect to US tariffs, said Sriram Viji, president-designate of ACMA and MD of Brakes India. “India does have a disadvantage in that context competing with other countries. We are hoping that a resolution is reached soon.”

While US exports have been softer, the domestic market has remained robust, thanks to the goods and services tax (GST) reduction in September 2025.

The Indian auto component industry grew by 6.8% year-on-year to Rs 3.56 lakh crore ($41.2 billion) in H1 FY26, supported by stable domestic demand, a resilient aftermarket, and continued investments in capacity expansion, localisation and technology upgradation.

Sales to OEMs rose by 7.3% to Rs 3.04 lakh crore ($35.2 billion) during the period, led primarily by the passenger vehicle and LCV segments. The aftermarket recorded a robust growth of 9% clocking Rs 53,160 crore ($6.1 billion), driven by an expanding vehicle parc, increasing formalisation of the repair and maintenance ecosystem, and deeper penetration of organised channels.

On the external trade front, exports of auto components grew by 9.3% to $12.1 billion, while imports increased by around 12.5% to $12.3 billion, resulting in a trade deficit of $180 million, compared to a surplus of $150 million in H1 FY25. It is important to note that this export growth was achieved despite significant global headwinds, including supply-chain disruptions, raw material cost pressures, and weakening aggregate demand in key markets. The US and Germany remained among the top export destinations, while China, Japan and Germany continued to be the leading sources of imports.

Electric vehicles accounted for 4.6% of total supplies to OEMs, underscoring the steady transition towards new-age mobility.

“While domestic demand remains broadly stable, the operating environment continues to be shaped by geopolitical uncertainties, supply-chain disruptions and cost pressures,” said Viji. “Addressing challenges such as the availability of critical materials, including rare-earth magnets, and enhancing supply-chain resilience will be critical for sustaining long-term growth,” he explained.

The second half of the fiscal is expected to benefit from improving retail sentiment, supported by recent policy measures, seasonal demand and continued infrastructure-led activity, said Singhania.

“The reduction in GST on select vehicle categories, effective post-September, is expected to support demand momentum in the second half of FY26, particularly in passenger vehicles and two-wheelers, with potential positive spillovers for the component ecosystem. In addition, sustained performance in tractors and a gradual recovery in commercial vehicles could further strengthen demand as utilisation levels improve,” he said. “The industry continues to face key headwinds including geopolitical uncertainties, rising freight costs, raw-material price volatility, and the limited availability of critical materials such as rare-earth magnets,” Singhania cautioned.