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 expected to attract Rs. 25,000-30,000 crore (US$ 2.89-3.46 billion) in FY26 for capacity expansion and EV part localisation, following an estimated investment of Rs. 15,000-20,000 crore (US$ 1.73-2.31 billion) in FY25.
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.
*The auto component sector is projected to achieve exports worth Rs. 8,54,700 crore (US$ 100 billion) by 2030.
*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.
* 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 Bharat New Car Assessment Program (BNCAP) will boost the auto component value chain by driving advanced manufacturing, fostering innovation, and promoting global standards.
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.
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