India’s auto component industry has emerged as one of the fastest-growing industries in the country driven by significant exports, growing diversification of supply chain, and growing ties between international auto manufacturers. As a result of the utilization of technology, localization, partnership, and investment in electric vehicles and advanced automobiles, Indian auto parts suppliers have been able to enhance their market position. Besides the role of the industry in exports, job creation, and industrial development, India has been gradually making its way into the manufacturing and sourcing business by benefiting from the international ‘China + 1’ strategy and increasing demand for low-cost and high-quality automobile components. As per the statistics released by ACMA, the value of production of the auto components sector in India has been recorded at Rs. 6.73 lakh crore (US$ 80.20 billion) in FY25, indicating a growth in revenue of 9.60% as compared to the previous year and a CAGR of 14.00% during FY20-FY25. The growth trend was carried forward into FY26 when the sector earned revenues worth Rs. 3.56 lakh crore (US$ 40.28 billion) in H1 FY26 (April-September 2025) on account of the favourable market conditions.
Export Growth Strengthening India’s Global Position
The exports remain one of the key growth drivers in the auto component industry in India. The number of Indian companies supplying components to global original equipment manufacturers (OEMs) across in North America, Europe, Asia and Africa has grown considerably.
According to ACMA, auto components exports stood at around Rs. 1.94 lakh crore (US$ 22.90 billion) in FY25 driven by increased demand from the foreign markets and supply chain diversification worldwide. An increasing trend in the exports has been seen during FY26 as well; however, auto components exports rose 9.30% to Rs. 1.07 lakh crore (US$ 12.10 billion) in H1 FY26. The United States and Germany remained amongst the prominent destinations for exporters from India.
Sales to original equipment manufacturers (OEMs) grew by 7.30% to Rs. 3.04 lakh crore (US$ 34.40 billion) in H1 FY26, mostly driven by passenger vehicles and light commercial vehicles. Auto component sales in the aftermarket segment grew by 9.00% to Rs. 53,160 crore (US$ 6.02 billion).
Source: ACMA
India’s overall automobile exports have also gained momentum. As per SIAM, total automobile exports in FY26 have touched an all-time high of 66.40 lakh units, achieving an annual growth rate of 24%, which is the highest in the past seven years. Meanwhile, exports of passenger vehicles in FY25 also crossed an all-time high of 7.70 lakh units, growing by 14.60% over FY24.
Indian companies are increasingly exporting engine parts, transmissions, forgings and castings, electrical & electronic items, EV components, and precision engineering products. With more global acceptance of Indian-made components, India’s significance in the global automotive supply chain will increase.
Government Initiatives Supporting Industry Expansion
Government initiatives are playing a major role in strengthening India’s automotive manufacturing ecosystem and improving global competitiveness.
Production Linked Incentive (PLI) Scheme:
The Production Linked Incentive (PLI) Scheme for Automobile and Auto Components that was introduced in September 2021 has been allocated a budget of Rs. 25,938 crore (US$ 3.07 billion). This scheme is intended to enhance manufacturing activities related to the production of Advanced Automotive Technology (AAT) items from FY23 to FY27 and involves the following key areas:
- Deep localisation
- EV component manufacturing
- Advanced automotive technologies
- Global supply-chain integration
- Employment generation
As of November 2025, the total investments made by the scheme had been Rs. 35,657 crore (US$ 4.04 billion), whereas the total sales determined were Rs. 32,879 crore (US$ 3.72 billion). In addition to this, the Union Budget for 2026-27 increased the budget for the PLI scheme for automobile and auto components to Rs. 5,940 crore (US$ 0.67 billion).
Make in India and Supply-Chain Diversification:
India is increasingly being positioned as a preferred sourcing destination under the ‘China+1’ strategy. According to the Press Information Bureau (PIB), the industry’s export share exceeds 25% of the production in terms of value and seeks foreign investment worth about Rs. 6,186 crore (US$ 0.74 billion) by FY28.
Various government measures promoting EVs along with localization and competitiveness in manufacturing are also fuelling the growth of the industry in India. Indian auto components manufacturers have been expanding investments in EV components, battery systems, electronics, light-weight materials, precision engineering and intelligent manufacturing systems in recent times. This is leading to various opportunities for integration of Indian suppliers in the EV supply chains across the globe. Manufacturers are also scaling up using automation and robotics to make their operations productive and export oriented. According to the Ministry of Heavy Industries, the PLI-Auto Scheme aims to develop a robust domestic supply chain for advanced automotive technologies & zero emission vehicles.
Growing Investments and Global Partnerships:
There is an increase in the number of strategic alliances that Indian auto components manufacturers are engaging in with foreign automobile manufacturers to increase exports and improve their technological abilities. There is also an increase in the capital investment being undertaken within the Indian automotive sector where Indian auto component manufacturers have projected capital investment in the range of Rs. 21,140 crore (US$ 2.50 billion) and Rs. 25,368 crore (US$ 3 billion) during FY25.
Global OEMs are expanding sourcing components from India due to:
- Competitive manufacturing costs
- Skilled workforce
- Strong engineering capabilities
- Expanding domestic market
- Policy support
This development will serve to enhance India’s position as an automobile manufacturing hub even further.
Growth Drivers and Key Trends
The following factors are driving the expansion of India’s auto component industry:
Outlook and Road Ahead
There will be significant development of auto component manufacturing industries in India in the upcoming period due to the increasing trend of exports, use of electric cars, and globalization of the automotive manufacturing industry supply chain. It is forecasted that the combination of growing localization, positive government policies, and investments made in advanced automotive technology will help India strengthen its position among the biggest manufacturing centres across the globe. According to ACMA, the size of the industry grew by nearly twice during FY20- FY25 and remains strong concerning exports. Increased demand for electric car parts, precise engineering parts, and advanced automotive technology will provide ample opportunities for Indian businesses in the future. It is forecasted that global procurement from India will increase considerably alongside domestic production of automobiles and favourable government policies.
FAQs
What is driving the growth of India’s auto component industry?
Export growth, global supply-chain diversification, EV adoption, localisation initiatives and government support under the PLI scheme are major drivers supporting the growth of India’s auto component industry.
What is the future growth potential of the industry?
India’s auto component industry is expected to witness strong long-term growth supported by rising exports, EV manufacturing, increasing global sourcing and investments in advanced automotive technologies.
How is the PLI scheme supporting the auto component sector?
The PLI Scheme for Automobile and Auto Components provides incentives for manufacturing Advanced Automotive Technology (AAT) products, promoting localisation, investment and global competitiveness.
Why are global automotive companies sourcing more components from India?
Competitive manufacturing costs, strong engineering capabilities, skilled workforce, policy support and supply-chain diversification strategies are encouraging global companies to source more components from India.
What are the key challenges facing the industry?
Supply-chain disruptions, raw material price volatility, technology transition costs, dependence on imports for certain advanced components and global trade uncertainties remain major challenges for the industry.