Automotive Industry: Powering India's participation in Global Value Chains (GVCs)

India’s automotive industry, contributing 7.1% to national Gross Domestic Product (GDP) and 49% to manufacturing GDP, is a cornerstone of industrial growth. The sector supports millions of jobs, with vehicle production exceeding 28 million units in FY23. It maintains strong linkages with steel, electronics, and Information Technology (IT). Despite this robust foundation, India's share in the globally traded auto components market is only 3% ~ Rs. 1,72,200 crore (US$ 20 billion), indicating significant untapped potential. The NITI Aayog report titled ‘Automotive Industry: Powering India’s Participation in Global Value Chains,’ launched on April 11, 2025, outlines strategic reforms to enhance this footprint. The Vision 2030 roadmap aims to scale production to Rs. 12,48,450 crore (US$ 145 billion), raise exports to Rs. 5,16,600 crore (US$ 60 billion) and generate 2–2.5 million jobs. With effective execution, India could grow its global trade share from 3% to 8% and build a Rs. 2,15,250 crore (US$ 25 billion) trade surplus by 2030.

Major government schemes such as Make in India, Atmanirbhar Bharat, and the Production Linked Incentive (PLI) Scheme, along with Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) and the PM E-Drive Scheme, have collectively mobilised over Rs. 66,000 crore (US$ 7.69 billion) to support Electric Vehicles (EV), localisation, and component manufacturing. However, India faces a 10% cost disadvantage compared to China due to high logistics, raw materials, and financing costs. Proposed interventions include operational expenditure support, Research and Development (R&D) incentives, Intellectual Property (IP) transfer, cluster development, and Industry 4.0 adoption. By addressing structural inefficiencies and fostering international collaborations, India can become a competitive hub for high-value, precision auto components, supporting its ambitions for clean, smart, and connected mobility.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.