India Eyes Global Leadership in Auto Components

India’s expanding manufacturing base and cost advantages are driving its rise as a global auto components exporter

India Poised to Lead Global Auto Component Market, Says NITI Aayog

India is revving up its engine for a bigger role in the global auto component market. According to a new report from NITI Aayog, the country’s robust manufacturing infrastructure and competitive cost structure are creating a perfect formula for growth. While India currently holds a modest share in the global space, the signs of acceleration are evident—and the momentum is unmistakably upward.

Auto Exports on the Rise: A 73% Surge Since FY21

India’s auto component exports have surged dramatically—from $7.4 billion in FY21 to $12.8 billion in FY24, marking a solid 73% growth. This spike not only signals a strong post-pandemic comeback but also reflects India’s increasing relevance in the international automotive supply chain.

Export growth is being fueled largely by three key categories: Drive Transmission Systems, Engine Components, and Electrical & Electronics parts, which together represent over half (53%) of India’s export value in this sector.

North America and Europe Drive Demand for Indian Auto Parts

India’s largest customers lie across the Atlantic. The United States alone accounts for 28% of India’s auto component exports, propelled by its extensive automotive production and aftermarket needs. North America and Europe together absorb 61% of India’s total auto exports, with Germany contributing another 7%, underscoring the appeal of Indian components among established global automakers.

Indian parts are making their way into globally recognized vehicle brands, proving their reliability, performance, and price competitiveness. This trend is likely to grow, especially as global manufacturers look to diversify supply chains and reduce dependency on single-source regions.

Emerging Markets Offer a New Frontier

While developed markets remain essential, NITI Aayog points to Africa and Southeast Asia as high-potential growth zones. These regions are witnessing an uptick in vehicle sales and localized manufacturing. India’s geographic proximity, along with shared trade ties, provides a strategic advantage, allowing faster turnaround times and reduced logistics costs.

As demand for vehicles rises in these developing economies, so too will the need for high-quality, affordable components—an area where India is quickly establishing a reputation.

A Balancing Act: Imports Also on the Rise

Interestingly, India’s auto component imports have mirrored the export boom, rising from $6.7 billion in FY21 to $12.1 billion in FY24—an 80% increase. This surge is primarily led by imports of engine components and body structures, including Body-in-White (BIW) units.

China remains India’s top import partner in this segment, accounting for 23% of all auto component imports. Despite efforts to localize manufacturing, India’s dependency on certain high-end parts from countries like China remains a strategic consideration moving forward.

Electric Vehicles Set to Reshape India’s Auto Supply Chain

India’s electric vehicle (EV) aspirations are accelerating, with ambitious targets to electrify a significant portion of its mobility by 2030. This shift is creating new opportunities in areas such as battery management systems, power electronics, and lightweight materials—all of which are ripe for innovation and export.

The global EV boom means suppliers that can offer both quality and affordability will be in high demand. India’s evolving capabilities in advanced component manufacturing position it well to tap into this demand, not just domestically but across the globe.

Strategic Advantages That Drive Competitiveness

At the core of India’s rise is its cost advantage, combined with an increasingly technologically advanced manufacturing base. Government initiatives like Make in India, PLI (Production Linked Incentive) schemes, and targeted infrastructure upgrades are enhancing supply chain efficiency and supporting small and medium enterprises (SMEs) that form the backbone of the auto component ecosystem.

Additionally, India’s large skilled workforce, improving logistics networks, and growing R&D capacity make it a formidable player in the evolving global auto component landscape.

Conclusion: India’s Global Drive Gains Momentum

India’s journey from a modest exporter to a serious contender in the global auto component market is gaining traction. The country’s strategic geographic location, coupled with a strong manufacturing ecosystem and favorable cost structures, makes it well-positioned to lead the next wave of global automotive supply chains.

For policymakers, manufacturers, and exporters, the road ahead is full of opportunities—but also requires consistent innovation, policy support, and strategic diversification to ensure India doesn’t just join the race, but leads it.

Disclaimer:
This article is a reimagined journalistic interpretation of publicly available data and insights from NITI Aayog’s latest report. It is intended for informational purposes only and does not constitute financial or investment advice.

source : The Economic Times