EV surge, tariff impact turns India into net auto parts importer in FY26

A surge in electric vehicle sales turned India into a net importer of auto components in the financial year 2026, snapping a two-year run as a net exporter.

According to data released by the Automotive Component Manufacturers Association (Acma) on Tuesday, India imported components worth $25.4 billion in FY26, a growth of 13%. Imports grew 7% in FY25. Exports at $24 billion grew 5%, slower than the 8% growth seen in FY25, amid tariff headwinds and the West Asia war.

The surge in imports resulted in a $1.4 billion deficit, compared with a $0.5 billion surplus in the financial year 2025.

"There was strong growth in the domestic market, especially in electric vehicles. As the level localisation is low in electric vehicles, the imports surged during the year," Vinnie Mehta, director general at Acma, said during a conference in New Delhi.

Imports from Asia, largely from China, surged 19% to $17.75 billion. This surge was in contrast with flat growth in exports of $7.3 billion to North America, India's second-largest component export market in the last fiscal year.

The surge in imports from China would directly align with increasing electric vehicle sales, which get their lithium-ion cells from the country.

According to Vahan data, electric vehicle sales surged 25% to cross more than 2.4 million units in FY26, with the number of models across two-wheeler, three-wheeler, and passenger vehicles increasing during the last financial year.

Policy support awaited

While the government has incentivised production of EV components and cells within the country through two production-linked incentives, the disbursal to auto component firms across both schemes remains muted, with none receiving significant direct support from the government.

Last year, the ministry of heavy industries had held talks with the industry about a new dedicated scheme to incentivize exports from the Indian market amid tariff headwinds. However, industry executives said the scheme to promote exports has not been finalised yet.

In March-April 2025, the US President Donald Trump administration imposed a 25% tariff on automobile goods and Indian imports separately as part of Section 232 of the US Trade Act and the reciprocal tariffs regime.

The US Supreme Court later struck down the reciprocal tariffs, leading to refunds of additional taxes paid by companies, including Indian companies.

“Some companies have received their refunds while some others are still waiting,” Vikrampati Singhania, managing director at JK Fenner (India) Ltd and Acma president, told reporters.

Mint reported on 1 June that companies, including Ceat, Balkrishna Industries, CNH India and Gokaldas Exports have expressed hopes about receiving tariff refunds via the regulator in the US or their customers who can pass on the additional taxes paid.

Fresh tariff concerns

The auto component body is also engaging with US trade authorities on the Section 301 investigation into the industry, looking at forced labour and excess industrial capacity.

Mehta noted that the industry has made its representation and is expected to meet with the US authorities again soon to counter the allegations made, which could threaten to increase tariffs on Indian exports again.