New Delhi: The government is considering ways to provide funds for research and development and intellectual property creation to support Indian exporters of auto components as they face the headwinds of US tariffs, according to two people aware of the development.
The plan may include a component to support R&D for Indian auto parts makers using funds from the Anusandhan National Research Foundation (ANRF) under the Department of Science and Technology, one person said, requesting anonymity. Funds may also be provided for intellectual property rights and transfers, for which the heavy industries ministry is in talks with the commerce ministry, the person said.
“The ministry of heavy industries is in discussions with many other government bodies and with the industry for the scheme. The goal is to create an ecosystem, a full package covering all aspects for auto component manufacturers,” the second person said, requesting anonymity.
Both people said stakeholder consultations are under way and no amount has been decided for the scheme yet.
India’s auto parts industry, valued at about $111 billion, has a 3-4% share in global exports, prompting the government to provide a one-stop-shop scheme for the sector. The US is a key market for Indian auto component exporters.
The ANRF aims to create a fund of ₹50,000 crore in the 2023-28 period with the central government’s contribution of ₹14,000 crore and the remainder raised through donations from public sector companies, private sector organisations, philanthropic entities and international bodies. Mint reported earlier that the scheme, currently under discussion, will provide capex and opex support to these businesses.
Queries sent to the heavy industries ministry, the Department of Science and Technology and the commerce ministry did not elicit a response till press time.
Export growth
The steps are being taken as 50% tariffs proposed by US President Donald Trump on Indian exports are set to take effect on 27 August.
The country’s auto parts makers exported goods worth $22.9 billion in FY25, a rise of 8%. Of this, $7.35 billion worth of goods were exported to the North American region, according to the Automotive Component Manufacturers Association of India (ACMA).
In FY25, the component industry’s sales to vehicle makers rose 88% to ₹5.70 trillion from ₹3.02 trillion in the previous fiscal, according to ACMA data.
Auto component exports are difficult to diversify because very few countries have robust automobile manufacturing industries, according to experts. The other key export markets for the industry are Europe and Asia.
The scheme is likely to take inputs from a Niti Aayog report in April, which recommended that the government provide fiscal and non-fiscal support to the industry amid headwinds from China and the US.
While the US tariffs are set to be enforced soon, the auto parts industry also faces an approximately 10% cost disadvantage to China, the Niti Aayog report said in April.
The report set a target of auto parts production worth $145 billion and exports worth about $60 billion by 2030. But manufacturers face tough times as the effectiveness of schemes to boost auto parts productions is often misaligned with the specific needs of the sector, the report noted.
Niti Aayog noted that Indian manufacturers had expertise in making engine systems and suggested that the government provide fiscal support to components that form the biggest share of the country’s auto component exports pie.
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