Indian Auto Components Industry Analysis

The Government aims to double its exports of Auto Components to US$ 30 billion by 2026.

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 are expected to grow and reach US$ 30 billion in FY26.

* By FY28, the Indian auto industry aims to invest US$ 7 billion (Rs. 58,000 crore) 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.

* Production Linked Incentive (PLI) schemes on automobile and auto components are expected to bring a capex of Rs. 74,850 crore (US$ 9.58 billion) in the next five years. 

* 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: May, 2024

Auto Component Clusters

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

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