US is emerging as the strongest export market for India with the locally made car gaining favorable response from the world’s most competitive customers as it becomes the second largest market this year.
India is the largest exporters of small cars commonly referred as ‘compact’ and its major market was Mexico and South Africa. However, in the past few months the export of cars is gaining strong foothold in the American market where export of compact models like Ford EcoSport and Chevy Beat from India has witnessed constant splurge.
In the current FY19, US after it became the third-biggest export destination for Indian cars, has emerged the second-biggest market. South Africa, which used to be the second-biggest market in the past, now stands third.
American president Trump has raised voice over the non-existent import duties on India-made vehicles and the high taxes levied by the Indian government over cars, SUV and other vehicles hitting its market.
Trump has vociferously advocated higher import duties and emphasis on American cars to get equally treatment across different market and has threatened to raise taxes especially on Indian-made bikes that enjoy nearly negligible taxes to the American market. However, cars and bikes imported into India are charged duties and taxes in excess of 150% making them extremely expensive and uncompetitive against locally produced cars.
Exports of car and bikes from India are on a constant rise and from the miniscule market the US has emerged as a major destination for ‘Made-in-India’ products. The government date on exports shows that Mexico retains the top position in India’s exports of passenger vehicles segment (that includes cars, utility vehicles & vans) worth $407 million in the first quarter of the current fiscal year (April’18 to March’19).
US stands at $268 million (Rs 1876 crore approximately) in three months ended June, data with the Union commerce ministry showed, accounting for about 15% of total car exports from India. Shipments to South Africa were significantly lower at $199 million in the same period.
This surge in exports from India to US comes at a time when US President Donald Trump has been pushing American carmakers to do more local production. “I want new plants to be built here for cars sold here,” he had tweeted last year, ahead of a meeting with heads of American car majors, including Ford and GM.
This growth in export to US is coming on the back of an increasing exports by Ford which manufactures its compact SUV EcoSport in India and ships it to US. Women amongst others are its staunch customers going for its small curved design and easy driveability.
Ford India, a subsidiary of American carmaker Ford Motor Company started exporting the EcoSport, manufactured at its Chennai plant, to the US last year. Ford India also overtook Hyundai as the biggest exporter of passenger vehicles from India last year. The company exported about 35,000 cars manufactured in India to several export markets including US in the April-June quarter.
In the entire FY18, India had exported vehicles worth $654 million to the US alone, after $666 million to South Africa and Mexico was the most important destination of ‘made in India’ cars.
