Over the period between FY16 to FY22, the automotive components industry registered a CAGR of 6.35%, reaching US$ 56.60 billion in FY22, with exports growing at a CAGR of 11.89% during FY16-FY22 to reach US$ 19 billion in FY22. The auto components industry accounted for 2.3% of India’s GDP and provided direct employment to 1.5 million people. By 2026, the automobile component sector will contribute 5-7% of India's GDP. The automobile component industry turnover stood at Rs. 4.20 lakh crore (US$ 56.5 billion) between April 2021-March 2022 the industry had revenue growth of 23% as compared to FY18-19. The Auto components industry is expected to grow to US$ 200 billion by FY26. According to ICRA, Auto ancillaries’ revenue is estimated to increase by 8-10% in FY23.
India’s auto component’s aftermarket witnessed a 15% growth from US$ 8.70 billion in 2020-21 to US$ 10 billion in FY22. Strong international demand and resurgence in the local original equipment and aftermarket segments are predicted to help the Indian auto component industry grow by 20-23% in FY22.
As per Automobile Component Manufacturers Association (ACMA), automobile component export from India is expected to reach US$ 30 billion by 2026. The Indian auto component industry aims to achieve US$ 200 billion in revenue by 2026.
India has a very strong position in the international market. It is the largest manufacturer of tractors, second-largest manufacturer for buses and the third largest for heavy trucks in the world. Indian automotive industry (including component manufacturing) is expected to reach between Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Indian automobile sector recorded an inflow of huge investments from domestic and foreign manufacturers. FDI inflow in the sector stood at US$ 33.54 billion between April 2000-June 2022.
Domestic automobile production increased at 2.36% CAGR during FY16-FY20 with 26.36 million vehicles being manufactured in the country in FY20. Production of two wheelers, passenger vehicles, commercial vehicles and three wheelers reached 17.71 million, 3.65 million, 0.80 million, and 0.75 million, respectively, in FY22. In FY22, the total output of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycles was 22,933,230 units. Automobile export is expected to grow at a CAGR of 3.05% during 2016-2026. The Government of India expects automobile sector to attract US$ 8-10 billion in local and foreign investment by 2023.
The Indian government announced a PLI scheme in February 2022. Under the PLI Auto scheme, the government received investment proposals worth Rs. 45,016 crore (US$ 6.04 billion) from 20 automotive companies. This scheme is expected to generate Rs. 2,31,500 crore (US$ 31.08 billion) in additional output. In December 2022, Union Minister of Road Transport and Highways, Mr. Nitin Gadkari, directed automakers to start producing flex-fuel vehicles in the next 6 months.
In November 2022, auto components maker Sona BLW precision forgings ltd. announced its plans to increase capex by Rs. 1,000 crores (US$ 123.28 million) for its electric vehicles business.
In October 2022, auto components maker Minda Corporation announced its partnership with South Korean firm Daesung Eltec, to bring in next-generation advanced driver system solutions to India.
In May 2022, Badve Engineering Limited entered into a Commercial Agreement with EVR Motors Limited, Israel, for collaboration on the development and manufacturing of Two and three-wheeler electric vehicles.
In December 2021, Tata Motors has lined up investments worth more than US$ 1 billion in the next 4-5 years for its commercial vehicle business.
In December 2021, MG Motor India was exploring export opportunities in the UK and South Africa. The company has plans to make India an export hub.
In November 2021, MG Motor India has teamed up with CleanMax to become the world's first passenger car manufacturer to use a wind-solar hybrid energy system.
In October 2021, Maharashtra government signed an MoU with Causis E-Mobility Pvt. Ltd., a joint venture of the UK-based Causis Group, to set up a zero-emission electric vehicle (EV) manufacturing facility at Talegaon, near Pune, with an investment of Rs. 2,800 crore (US$ 317.96 million).
In September 2021, the Indian government issued notification regarding a PLI scheme for automobile and auto components worth Rs. 25,938 crore (US$ 3.49 billion).
In March 2021, the government announced to offer fresh incentives to companies making electric vehicles (EVs) as part of a broad auto sector scheme. The scheme is expected to attract US$ 14 billion of investment in the next five years.
The Indian government has outlined US$ 7.8 billion for the automobile and auto components sector in production-linked incentive schemes under the Department of Heavy Industries.
In December 2020, Power PSU JV EESL announced plan to install ~500 electric vehicle (EV) charging stations in the country in fiscal 2020-21
In November 2020, the Union Cabinet approved PLI scheme in automobile and auto components with an approved financial outlay over a five-year period of Rs. 57,042 crore (US$ 8.1 billion).
In October 2020, Japan Bank for International Cooperation (JBIC) agreed to provide US$ 1 billion (Rs. 7,400 crore) to SBI (State Bank of India) for funding the manufacturing and sales business of suppliers and dealers of Japanese automobile manufacturers as well as providing auto loans for the purchase of Japanese automobiles in India.A cumulative investment of ~Rs. 12.5 trillion (US$ 180 billion) in vehicle production and charging infrastructure would be required until 2030 to meet India’s electric vehicle (EV) ambitions. This is likely to boost the demand for auto components from local manufacturers.