Wednesday, July 08, 2026
By Kamal Swami
US Govt Concerned About Indian Auto Parts Exports
India's automobile component industry is facing fresh uncertainty after the United States initiated two separate investigations targeting the country's automotive exports. The main objective of these investigations is to ensure that manufacturers of auto parts in India are not following any illegal practices to increase their production from the subsidies provided by the government. The positive outcome of these probes could directly impact auto component shipments worth nearly $6 billion to the US market.
According to industry representatives, one investigation will examine whether Indian manufacturers benefit from unfair labour practices, while the second seeks to determine if government incentives have created excess production capacity that could distort global competition. As part of the ongoing review, US authorities have already proposed an additional 12.5% tariff on selected auto component imports, while the overcapacity investigation is still in progress.
Responding to the allegations, the Automotive Component Manufacturers Association (ACMA) has strongly defended the Indian industry. ACMA Director General Vinnie Mehta stated that Indian auto component manufacturers operate under strict labour regulations and do not engage in unfair employment practices. He also rejected claims that the industry has expanded production through significant government subsidies.
Mehta further explained that only a handful of companies have received benefits under the government's Production Linked Incentive (PLI) scheme, making it inaccurate to describe the sector as subsidy-driven. He argued that if manufacturers were already dealing with excess capacity, they would not continue investing in expanding their production facilities.
The United States remains India's largest export destination for automotive components, making the outcome of these investigations particularly significant for the industry. Although Indian suppliers have continued to maintain healthy export volumes despite recent trade tensions, any additional tariffs or trade restrictions could affect competitiveness in one of their most important overseas markets.
Industry stakeholders are expected to continue engaging with US authorities to present evidence supporting India's compliance with international labour standards and fair trade practices. The final decision from the US could play a crucial role in shaping the future of bilateral trade in the automotive components sector.
