Indian Auto Components Industry Analysis

The Indian auto components industry is expected to grow to US$ 200 billion by FY26

Advantage India

Robust
Demand

* Growing working population and expanding middle class are expected to remain key demand drivers.

* India is witnessing robust demand for auto components amid ongoing shift in global supply chain.

* With plans to reduce auto components’ import dependence, domestic players are expected to witness a demand surge.

Export
Opportunities

* India is emerging as a global hub for auto component sourcing and the industry exports over 25% of its production annually.

* Auto component exports from India is expected to reach US$ 80 billion by 2026.

* By FY28, the Indian auto industry aims to invest Rs. 58,000 crore (US$ 7 billion) to boost localization of advanced components like electric motors and automatic transmissions, reducing imports and leveraging 'China Plus One’ trend.

Policy
Support

* 100% FDI is allowed under the automatic route for auto components sector.

* In January 2024, the Government of India approved additional fund of Rs. 1,500 crore (US$ 180.3 million) for second phase of FAME-II.

* The Bharat New Car Assessment Program (BNCAP) will not only strengthen the value chain of the auto component sector, but it will also drive the manufacturing of cutting-edge components, encourage innovation, and foster global excellence.

Competitive
Advantage

* A cost-effective manufacturing base keeps costs lower by 10-25% relative to operations in Europe and Latin America.

* India is the 2nd largest steel producer globally, thus has a cost advantage.

* India is emerging as a global auto component sourcing hub due to its proximity to key automotive markets such as ASEAN, Europe, Japan and Korea.

Last updated: Apr, 2025

Auto Component Clusters

  • Maharashtra
  • Tamil Nadu
  • National Capital Region(NCR)
  • Gujarat
  • Madhya Pradesh
Agriculture India

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India is emerging as the world's hub of choice when it comes to manufacturing quality auto components. The industry has over 600 manufacturers who exceed the world's most stringent quality standard.

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