Indian automobile manufacturers are confronting a new reality: key export markets are slamming the door on their ambitions with steep tariff barriers.
South Africa is considering significant duty increases on imported vehicles from countries like India and China, while Mexico has already implemented a 50% tariff on cars from countries without free trade agreements — including India.
For companies such as Maruti Suzuki and Hyundai Motor India that have bet heavily on exports to drive growth, these protectionist moves represent a challenge to their global expansion plans.
The twin challenges in Mexico and South Africa are particularly concerning because they are seen as key markets in India’s automotive export strategy — Mexico, as a gateway to Latin America, and South Africa, as a hub for the African continent.
Rahul Bharti, senior executive officer-corporate affairs at Maruti Suzuki, told analysts during an earnings call on Wednesday that the company will assess what is on the South African government’s agenda.
“The best thing is to be broad-based across a wide portfolio of countries, and we have 100 plus of them. So, we’ll try to de-risk to the maximum extent possible, but still, we are exposed to all kinds of global trade and tariff related issues,” Bharti said.
Why are countries raising barriers?
Mexico’s 50% tariff has been implemented to protect its domestic automotive industry and incentivise local manufacturing. The tariff applies to vehicles from nations without preferential trade agreements, leaving Indian manufacturers at a disadvantage compared to American, Canadian, European, and even some Asian competitors who benefit from Mexico’s extensive free trade agreement network.
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South Africa’s contemplated tariff increases follow similar logic. The country’s automotive sector, which directly employs over 110,000 people and supports hundreds of thousands more, has struggled with excess capacity and mounting competition from imported vehicles. Government officials in Pretoria argue that protecting local manufacturing is essential for preserving industrial capabilities in an economy battling high unemployment rates.
Both moves also reflect a broader global trend toward economic nationalism and industrial policy. Countries are increasingly prioritising domestic manufacturing and job creation over the free trade consensus that dominated the previous three decades.
What does this mean for Indian automakers?
The implications are consequential. According to a recent Lightstone report, Indian cars accounted for close to 50% of all vehicle imports into South Africa in 2025. Mexico represented an even more promising market due to its proximity to the United States and its role in regional supply chains.
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An impact on exports also means lower sales for India-based car manufacturers, who have developed operations in the country for it to serve as a key export base. It also comes as the industry worldwide is grappling with the shift to electric vehicles, geopolitical tensions, and governments’ desires to capture more manufacturing value domestically.
Higher tariffs could fundamentally undermine the value proposition of Indian cars: affordability combined with decent quality and fuel efficiency. A 50% tariff in Mexico or even a 15% increase in South Africa would negate these advantages, making Indian-made vehicles less competitive against locally assembled alternatives from Toyota, Volkswagen, General Motors, and others.
Chinese automakers, recognising these trends earlier, have aggressively established local production across multiple continents. Companies like BYD, Chery, and Great Wall have built or are building assembly plants in Thailand, Indonesia, Brazil, and African nations. This has allowed them to circumvent tariff barriers in some geographies to an extent.