The US-Iran war is disrupting exports and production in India’s auto components industry, which has approached the government for financial support and assured access to energy sources such as liquefied petroleum gas (LPG) and piped natural gas (PNG) used in manufacturing processes.
In a 9 March letter to the ministry of heavy industries (MHI), the Automotive Component Manufacturers Association of India (ACMA) highlighted a range of concerns, including export disruption, energy supply to factories, and delays in imports of critical raw materials. Mint has reviewed a copy of the letter.
The industry’s message to MHI Secretary Kamran Rizvi indicates that export logistics cost for auto component firms has surged in a range of 20-40% as vessels avoid the volatile Persian Gulf and Red Sea corridors, and take the longer route around the Cape of Good Hope. At the same time, imports of key inputs such as chemicals, synthetic rubber, aluminum scrap, and petrochemical-based inputs like polypropylene are also experiencing delays.
“Preliminary inputs received from member companies indicate that shipments to Europe, the United States and parts of the Middle East, which account for a substantial share of the sector’s exports, are being impacted due to vessel rerouting, congestion and rising logistics costs,” ACMA said in its letter.
The industry has sought temporary working capital support to offset cash-flow stress caused by export delays. It has also requested export-linked credit facility to help micro, small, and medium enterprises (MSMEs).
ACMA and the ministry of heavy industries did not immediately respond to Mint's emailed queries.
ACMA claims to have more than 1,100 members, with some of the biggest companies like Samvardhana Motherson, Sona Comstar and Bharat Forge being part of the grouping.
The vessel rerouting comes as shipments struggle to pass through the Strait of Hormuz between Iran and Oman amid the ongoing conflict, posing a hurdle for auto parts makers that export a large share of their production globally.
In the financial year 2025 (FY25), India's auto component exports stood at nearly $23 billion, with North America and Europe being two of the largest destinations.
Energy supply concerns
The industry has also flagged concerns over disruption of LPG and PNG supplies, and sought one month of continued supply until companies make alternative arrangements.
“Any disruption or uncertainty in the availability of LPG/PNG could impact production schedules of critical automotive components, particularly for MSME units, which have limited flexibility to transition to alternative energy sources in the short term,” the letter said.
The concerns come at a time when the auto component industry has faced challenges in its biggest market - the US - in FY26 due to high reciprocal tariffs.
Moreover, record-high production following a demand surge after the goods and services tax (GST) cuts in September already has pushed auto component makers to increase capacity and production.
Demand surge, supply constraints
In the December quarter, sales of two-wheelers and cars touched record highs. According to the Society of Indian Automobile Manufacturers (Siam), two-wheeler sales rose 17% year-on-year to 5.7 million units, while passenger vehicle sales increased 21% to 1.3 million units.
Automakers have already flagged that component makers are struggling to keep pace with the requirements of original equipment manufacturers (OEMs), prompting them to work with suppliers to increase their capacity.
Shailesh Chandra, managing director and chief executive at Tata Motors Passenger Vehicles, told analysts in a 5 February earnings call that the company is working on expansion of suppliers' capabilities.
“At Tier 1 to Tier 3 supplier level, especially, let's say, for example, castings and all, we are seeing that there is a general capacity constraint that is coming. So, we are working on enhancing the capacities and ramping up the supplies from the supplier,” Chandra said.
Shares of some of the biggest listed auto component makers in India, like Samvardhana Motherson, Sona Comstar, and Bosch Ltd have fallen in a range of 4-11% since the start of the conflict on 28 February. Nifty Auto has fallen 3% in the same period.