Advantage India
Robust
Demand
*Growing working population and expanding middle class are expected to remain the key demand drivers.
*India is the world’s third-largest automobile market by both value and volume.
*By 2030, ten million EVs could be sold each year. The EV market is expected to reach US$ 206 billion by 2030.
*India’s auto-component industry is poised to reach US$ 200 billion by 2030, supported by its cost competitiveness, skilled workforce, and growing domestic demand, according to a McKinsey report titled Shaping the future of India’s auto component industry.
Export
Opportunities
*India is emerging as a global hub for auto component sourcing and the industry exports over 25% of its production annually.
*Exports of auto components rose by 8%, reaching Rs. 1,95,726 crore (US$ 22.90 billion) in FY25, up from Rs. 1,81,196 crore (US$ 21.20 billion) in FY24.
*According to a McKinsey report, India's auto component exports are projected to reach US$ 70-100 billion by FY30, driven by rising demand for electric vehicle (EV) technologies and global supply chain diversification. Indian SMEs could capture US$ 20-30 billion of this opportunity by leveraging cost advantages and high-quality standards.
Policy
Support
*The Union Cabinet approved the Production Linked Incentive (PLI) Scheme for the Automobile and Auto Components sector on September 15, 2021, with a budgetary outlay of Rs. 25,938 crore (US$ 3.03 billion) from FY23 to FY27. The scheme is expected to attract fresh investments of over Rs. 42,500 crore (US$ 4.9 billion) during this period.
*The Indian automobile sector saw transformative growth in 2025 driven by GST cuts on small cars (from 28% to 18%), expanded low-GST EV portfolios (5%), and government EV incentives promoting local manufacturing and global OEM entry. The Production Linked Incentive (PLI) scheme is boosting investments in advanced automotive technologies and supply chain localization.
Competitive
Advantage
* A cost-effective manufacturing base in India keeps costs lower by 10-25% relative to operations in Europe and Latin America.
* India's Automotive Mission Plan 2047 aims to boost vehicle production to 50 million by 2030 and 200 million by 2047, positioning India among the top two global auto producers. It prioritizes sustainable vehicle production with hydrogen, electric, CNG, and biogas, while not curbing petrol or diesel vehicles immediately.
* Second-largest steel producer globally, hence 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.
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