According to B2B risk management consultancy Rubix Data Sciences, the revenue of India's automotive components industry is expected to cross $80.1 billion in FY2025 while exports have already touched $21.2 billion. Although the country's production of auto components has been rising at an 8 per cent CAGR since FY2020, exports have recorded a CAGR of 10 per cent during the same period, says the report.
One of the key trends here is the doubling of the contribution of the EV components industry to 6% of total production in FY2024. Battery technology and powertrain systems are turning out to be some of the most critical areas, amounting to 45% of EV manufacturing costs.
The Indian EV market, undergirded by the EV 30@30 initiative, recorded sales growth above 76 percent CAGR over FY2020 and FY2024 with projections for this growth to continue, according to the report.
The Indian government’s focus on localisation and self-reliance has led to significant investments in domestic manufacturing capabilities. Between FY2020 and FY2024, exports saw a 10 per cent CAGR, reaching $21.3 billion, with the US being the largest market. Simultaneously, a trade surplus of $300 million in FY2024 underscores India’s strategic shift in global automotive supply chains, the report points out.
A further area of investment pointed out in the report includes technology upgrades and modernization, for which Indian manufacturing has planned a capacity expansion and innovations amounting to $2.5 billion to $3 billion.
This matches the growth in demand for advanced components such as electric motors, ADAS, and lightweight materials. The report expects the market for ADAS to grow sixfold in the fiscal period, rising from $169 million in FY 2023 to nearly $1 billion by FY 2028.
As Rubix Data Sciences co-founder & CEO Mohan Ramaswamy puts it: "India is rapidly becoming a vital player in the global automotive supply chain, thanks to robust growth in vehicle production, the strong support from the government, and the unwavering commitment of component manufacturers -including a vibrant network of SMEs- to quality and innovation.
We believe this momentum will position India as an indispensable sourcing hub for global OEMs, especially as the industry seeks reliable, diversified alternatives."
Industry growth is further strengthened through such policies as the PLI scheme, PM e-Bus Sewa initiative, and the Vehicle Scrappage Policy.
The PLI scheme in itself is expected to create major employment and create economies of scale in advanced automotive technologies. Automotive Mission Plan 2047, by its words, has a commitment to mandate 50 per cent export share of automotive vehicles and components by the year 2047 to position India as a world manufacturing leader.
However, the industry is facing challenges like increasing Chinese imports of EV components and the strain of adapting to stringent BS VII norms. Notably, SMEs, which account for nearly 80 per cent of the sector by volume, are grappling with the need to modernise and align with the EV transition, it observes.
This report stresses the need for innovation in lightweight material development, emission control technologies, and the adoption of more advanced manufacturing techniques to keep pace with competition.
The automotive components industry holds a key position in India's domestic economy and is also an increasing force in global supply chains. India's automotive components industry has a great future ahead with investments in ADAS, which would be six times bigger at $1 billion by FY2028.
According to the report, the aftermarkets are expected to reach $14 billion in 2028 driven by the sales of used vehicles, as well as the vehicle parc, projected to exceed 340 million units by 2028.
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