Donald Trump's Tariffs: Big Opportunity For Indian EV Makers? E&Y Justifies

With the United States hiking tariffs on automotive imports, India’s Electric Vehicle (EV) industry has a golden opportunity to expand its footprint in the American market, particularly in the affordable passenger vehicle segment. According to an Ernst & Young (EY) spokesperson, strategic policy enhancements could help India significantly boost its exports in the fledgling EV market.

“India’s electric vehicle sector has a prime opportunity to capture a larger share of the US market, especially in the budget car segment,” said Saurabh Agarwal, Partner & Automotive Tax Leader at EY India, adding, “China’s 2023 auto and component exports to the US stood at $17.99 billion, while India’s were only $2.1 billion in 2024, highlighting the potential for growth.”

Also Read: No Impact of Donald Trump's Tariffs on India's Auto Sector | Republic Business

E&Y believes that India can step up as a key player by strengthening domestic manufacturing capabilities and enhancing export incentives.

One of the key recommendations by EY is to bolster the government’s Production-Linked Incentive (PLI) scheme. “To accelerate this, the government should enhance the PLI scheme by including more auto components, opening it to new players, and extending it by two years,” the spokesperson suggested.

It is to be noted that autos & auto parts and steel & aluminium articles, already subject to Section 232 tariffs at 25 percent, announced earlier in President Trump’s order on March 26, 2025, are not covered in the aforementioned order. However, the detailed list of auto components that will be subject to 25% import tariff in the US is awaited by Auto Component Manufacturers Association.  However, the auto parts body remains hopeful that the ongoing bilateral negotiations between the Indian and U.S. governments will lead to a balanced resolution that benefits both economies. 

“We believe that the strong trade relationship between India and the United States, especially in the auto components sector, will encourage continued dialogue to mitigate the impacts of these measures,” said Shradha Suri Marwah, President ACMA and CMD Subros Ltd.  She also stated that ACMA is committed to engaging with all stakeholders to ensure the long-term interests of the Indian auto component industry.