India swung from a $0.5 billion auto parts export surplus in FY25 to a $1.4 billion deficit in FY26 — its first net import position in two years. Imports surged 13% to $25.4 billion, led by $17.75 billion from China, as EV sales jumped 25% to over 2.4 million units. Exports grew only 5% to $24 billion, hampered by US tariffs and flat demand in North America. Government PLI disbursements remain stalled, and a new export incentive scheme has yet to be finalized.
According to www.livemint.com, India recorded a $1.4 billion trade deficit in automotive components for the financial year 2026 — its first net import position in two years — driven by surging electric vehicle (EV) demand and tariff-related headwinds.
Trade reversal driven by EV surge and import growth
India imported auto components worth $25.4 billion in FY26, a 13% increase over the prior year, while exports rose only 5% to $24 billion. That compares with an 8% export growth in FY25. The shift flipped India from a $0.5 billion surplus in FY25 to a $1.4 billion deficit in FY26 — marking the first time since FY24 that the country became a net importer of auto parts.
The Automotive Component Manufacturers Association (Acma) released the data on Tuesday. According to Vinnie Mehta, director general at Acma, “There was strong growth in the domestic market, especially in electric vehicles. As the level of localisation is low in electric vehicles, the imports surged during the year,” he said during a conference in New Delhi.
China dominates import surge; North America exports stall
Imports from Asia — predominantly from China — jumped 19% to $17.75 billion. This growth aligns directly with India’s rapid EV adoption: according to Vahan data, EV sales climbed 25% to exceed 2.4 million units in FY26 across two-wheelers, three-wheelers, and passenger vehicles. Most lithium-ion cells powering those vehicles are sourced from China.
In contrast, exports to North America — India’s second-largest component export market last fiscal year — remained flat at $7.3 billion. That stagnation occurred despite continued demand, as tariff uncertainty dampened momentum.
Tariff turbulence: US Section 232, refunds, and new threats
In March–April 2025, the US administration under President Donald Trump imposed a 25% tariff on automobile goods and Indian imports under Section 232 of the US Trade Act and a reciprocal tariffs regime. Although the US Supreme Court later struck down the reciprocal tariffs — triggering refunds — implementation remains uneven. Vikrampati Singhania, managing director at JK Fenner (India) Ltd and Acma president, told reporters: “Some companies have received their refunds while some others are still waiting.”
Companies including Ceat, Balkrishna Industries, CNH India, and Gokaldas Exports have publicly expressed hopes of receiving tariff refunds either directly from US regulators or via customers who can pass on reimbursed taxes.
Policy gap and pending export incentives
The Indian government has launched two production-linked incentive (PLI) schemes to boost domestic manufacturing of EV components and battery cells. However, disbursement to auto component firms across both schemes remains muted — no company has received significant direct support to date. In response, the Ministry of Heavy Industries held industry consultations last year about launching a dedicated export promotion scheme amid mounting tariff headwinds. Yet, as of mid-2026, industry executives confirm the scheme has not been finalised.
Meanwhile, Acma is actively engaging with US trade authorities on the ongoing Section 301 investigation into forced labour and excess industrial capacity in the auto components sector. Mehta noted the industry has submitted formal representations and expects to meet again with US officials soon to counter allegations that could trigger renewed tariff hikes on Indian exports.
Source: livemint.com
Compiled from international media by the SCI.AI editorial team.
