US duty relief may spur fresh orders for Indian industrial and auto suppliers

A sharp reset in US tariffs on Indian industrial exports could deliver a significant near-term boost to engineering companies, with duties on key industrial, oil and gas and equipment components expected to fall meaningfully, according to Naresh Jalan, managing director of Ramkrishna Forgings.

As reported by CNBC-TV18, Jalan said the biggest relief is likely to come not from auto parts but from industrial components, which currently face the steepest trade barriers. He added that the industry is awaiting the fine print of the revised tariff framework.

Jalan expects auto components and other engineering products to also be brought under a new tariff regime of around 18 per cent, compared with earlier levels of about 15 per cent or lower in certain categories. He stated that the expectation is for most engineering exports from India to be covered under a common and more predictable duty structure.

For the auto supply chain, Jalan informed that while automobiles and auto components fall under the US national security-linked Section 232 framework, India could receive carve-outs similar to those previously granted to countries such as South Korea and Japan. He said this expectation explains why customers moved quickly following the announcement, with buyers reaching out almost immediately to signal the possibility of fresh orders.

He added that while the final outcome will depend on the detailed terms of the trade agreement, US buyers broadly understand the direction of change and the industry is preparing on the assumption that an 18 per cent tariff will emerge as the new operating baseline across auto, industrial and engineering exports.

Reflecting similar optimism across the auto and engineering supply chain, Rakesh Sharma, executive director at Bajaj Auto, said the easing of tariffs may not have a major immediate impact on the company’s shipments to the US, but will gain importance as global production is increasingly scaled up from India. Sharma stated that the company foresees more production shifting to India over time and added that a more supportive tariff environment will aid the expansion of US-relevant products manufactured in the country.