Dalal Street Rattled: Auto Stocks Plunge as US Hits Indian Exports with 25% Tariff

Indian auto and auto component stocks came under pressure on Thursday after US President Donald Trump announced a sweeping 25% tariff on Indian exports to the United States, effective Friday.

The decision sparked a sharp sell-off across the automobile sector, with investors pricing in the risk of export disruptions and margin erosion for companies with significant US exposure.

Shares of Bharat Forge and Samvardhana Motherson International — two major players in the auto ancillary space — plunged over 3% each in early trade. Tata Motors and Balkrishna Industries also declined more than 2% apiece. In fact, all 15 constituents of the Nifty Auto index were trading in the red, with the index itself slipping as much as 1.46% during the session.

During early trading, the Nifty Auto index was down 0.2%, compared to a broader 0.58% decline in the benchmark Nifty50 index. Bharat Forge led the fall, dropping 2.8%, followed by Samvardhana Motherson (down 1.8%), Tata Motors (1.7%), and Balkrishna Industries (1.4%).

The US is a key export destination for several Indian auto component manufacturers. Industry players believe the sudden tariff hike will compress margins, force renegotiation of contracts, and possibly result in a diversion of export orders to other countries not facing similar duties.

Also Read: Despite Tariffs and Wars, India's Auto Component Industry Grows Nearly 10% in FY25, Post Trade Surplus of $453 Million | Republic World

“This is a significant setback, especially for companies that have long-term supply commitments to US-based OEMs,” stated a top executive of a leading auto component player, adding, “It also brings fresh uncertainty at a time when the sector is already dealing with cost inflation, EV transition investments, and fluctuating global demand.”

The tariffs come amid broader trade tensions, with the US calling out what it terms as “non-reciprocal” tariff structures. Trump, in a post on Truth Social, claimed that India’s tariffs are “among the highest in the world.”

Earlier, automotive (auto) component companies see a new opportunity to increase their exports manifold — if India signs a bilateral agreement with the US, even after tweaking tariffs in this sector.

An ACMA-BCG report has targeted Indian auto component exports to hit $100 billion — nearly a fivefold increase from $21 billion currently.

But for North America, India is a small market for auto component imports, accounting for 4 per cent ($6.7 billion) of its total requirement of $170 billion annually. However, for Indian auto component exporters, it is their largest market, accounting for 31 per cent of total exports.