US tariffs transitionary phase, not unduly worried: ACMA

New Delhi, Sep 12 (PTI) The Indian auto components industry is not unduly worried about the implications of the US tariffs on products from India, although in the short term, it is having an impact with 'some stalling' from customers there due to the uncertainty, officials of ACMA said on Friday.

Considering the current tariff situation with the US, they said the India-EU FTA becomes even more important, and there is a need to deepen India's engagement with Europe.

In the last financial year, India's auto components exports to the US were at USD 6.6 billion, out of which USD 3.5 billion worth of components were for cars and small trucks, and are now at a 25 per cent tariff. Another USD 3 billion from components for commercial vehicles, off-road vehicles, tractors and construction equipment is now at 50 per cent tariff, Automotive Component Manufacturers Association of India (ACMA) Director General Vinnie Mehta told reporters here.

"(Exports) to the US is USD 6.6 billion out of USD 22 billion, which means there is a large alternate market also available to the industry. The industry has been building out, based on risk mitigation markets, customers and so on and so forth," ACMA President Designate, Vikrampati Singhania, said when asked what the components makers are currently doing from a practical point of view at present.

Singhania, who is also the Managing Director, JK Fenner (India) Ltd, stressed the need to look at India's current US tariff situation "relative to every other country's tariff", while focusing on enhancing the cost competitiveness of domestic companies.

"We should not see 25 per cent as 25 per cent. We should see other countries are at 25 per cent or 19 per cent or at lower tariffs. It is a differential that is the real point to think about. Don't think about it as we were at 2.5 per cent and we are now 25 per cent, (because) so are most other countries that we compete against in the global landscape," he asserted.

Indian companies have been working and looking at alternative markets as part of a strategy and an agenda, Singhania added.

ACMA President Shradha Suri Marwah also reiterated that it is the USD 3.5 billion segment "which is really impacted at the moment at 50 per cent".

Asked if customers in the US have held back purchases from Indian component makers, she said, "There is some stalling. I would say...Have they moved to alternate markets? It's not so easy, because these are long-term developments. There's technology, there's investments gone into it." Mehta said, "In the first quarter -- April, May, June, our export and import figures match exactly USD 1.77 billion of what we did in the previous financial year...there has been absolutely no impact." Stating that negotiations are ongoing on a commercial basis, Marwah said, "I think everyone is waiting and watching, because nobody really knows what will happen tomorrow. That is where we stand right now." Singhania, however, said, "This is a transitionary phase, and I think both our countries have a great relationship...This is not the end of it. It is the beginning of lots of conversations which will lead to where we both desire ourselves to be." On India's proposed FTA with the EU, Mehta said, it is "hugely important for us because the European Union is as huge a market for us as the US. Now with the US market under a lot of cloud, we would like to…deepen our engagement with the European Union." The trade with the EU is very well balanced, with India exporting USD 6.7 billion worth of auto components to the EU and importing about USD 5.7 billion worth of auto components.

"There is a give and take happening. Therefore, it makes sense to lower the trade barriers. That apart, the European Union is also a huge treasure house of a lot of technologies. We would like technology investments into the country from Europe," Mehta noted. PTI RKL SHW