Synopsis

India's auto components sector hopes for a favorable trade deal with the United States. The US is investigating Indian imports over labor and subsidy concerns. ACMA asserts that Indian labor laws are robust and child labor is absent. The industry body also refutes claims of receiving government subsidies for excess capacity. Despite current tariffs, Indian auto component exports to the US have remained consistent.

The Indian auto components sector is banking on the government to "work out the best deal" in the trade negotiations with the US, which is investigating imports of all items from India over labour issues and subsidy-induced excess capacity, industry body ACMA said on Tuesday.

The US is India's largest export market for auto components, accounting for 26 per cent of the country's total exports in FY26. In the last fiscal, India's total auto components exports rose 5 per cent to USD 24 billion (Rs 2,12,176 crore), Automotive Component Manufacturers Association of India (ACMA) said.

"They (the government) are trying to negotiate the best deal for us. So we need to wait and watch and see how much tariffs eventually they (the US) would be applying on India," ACMA Director General Vinnie Mehta told reporters here, noting that the Indian government is working with the US for a bilateral trade agreement.

He was responding to a query on the current tariff situation and the investigations by the US against 16 countries, including India.

At present, Indian components face two tariff slabs of 25 per cent and 12.5 per cent in the US, Mehta noted.

On the investigations by the US, he said, "There are two - one on labour and the other on excess capacity because of government subsidies. The government of India is strongly refuting this."

Elaborating, Mehta said, "Essentially, they (the US) allege that we are mistreating our labour, we're not taking care of our labour, we underpay them. The second one is over-capacity, as a result of government subsidy."

Refuting both the allegations, Mehta, who had travelled to the US in April to give testimony before the USTR jury representing ACMA on behalf of the Indian components industry, said, "We have alluded to all our labour laws, the recently announced labour codes, and that the auto component industry is an organised part of the industry."

On the allegation of child labour in the industry, Mehta asserted, "We do not employ any child labourers as it is a very technical sector."

Over the subsidy, he said, "The auto component industry does not get any subsidy from the government. Even in the PLI scheme, we have just about two odd auto component manufacturers which have got disbursement out of 1,100 ACMA members."

"There are no government schemes that are doling out money, and if you look at the capacity, if we had over capacity, then we would not be investing in more capacity," Mehta added.

Commenting on how India's exports to the US could be impacted, he said,"Let us see how things pan out, but despite high tariffs, our exports to the US and in North America have remained consistent in the last fiscal."

Even in the first quarter of FY27, he said, "They continue to remain consistent, which is something very good."