India’s growing stature as a manufacturing hub for automotive components is being increasingly recognized on the global stage. According to a recent report by NITI Aayog, the country is poised to become a global leader in the auto component export market, thanks to its cost competitiveness, skilled labour, expanding production capabilities, and strong policy support.

In FY21, India exported auto components worth Rs. 63,181 crore (US$ 7.4 billion). This number rose sharply to Rs. 1,09,286 crore (US$ 12.8 billion) in FY24, reflecting a 73% surge in just three years. This remarkable growth highlights India’s strong post-pandemic recovery, a rising global appetite for Indian automotive components, and the country’s integration into international supply chains.

What Drives India's Export Growth?

India’s auto component export boom is not random—it is driven by the country’s stronghold in key high-demand segments:

• Drive Transmission Systems (DTS)

• Engine Components

• Electrical and Electronics Components

Together, these account for 53% of India’s total automotive exports, showing a clear demand pattern for precision-driven, high-quality components.

Leading Export Markets: USA and Europe

The USA is India’s largest auto component export market, contributing 28% to the total export pie. Close behind are:

• Germany with 7%

• Europe overall accounting for 27%

• North America as a whole contributing 34%

These figures underscore the trust global automotive giants place in Indian parts, particularly in engine and transmission systems. Many of these Indian-made components are integral to vehicles produced in Europe and North America, including luxury and commercial vehicle segments.

The Role of Competitive Advantage

India’s lower manufacturing costs, supported by skilled workforce availability, robust supply chain networks, and policy incentives, have contributed to making the country a reliable supplier in global markets. Additionally, free trade agreements (FTAs) with various regions and government export promotion policies have bolstered the growth.

Emerging Opportunities in Africa and Southeast Asia

Beyond traditional markets like the US and Europe, India is strategically placed to serve the growing automotive needs of Africa and Southeast Asia. The proximity to these regions, combined with rising demand for affordable and durable automotive solutions, presents a significant export growth potential in the coming years.

Import Trends Also Show Strength of Domestic Market

While exports are booming, India’s auto component imports have also risen significantly—from Rs. 57,205 crore (US$ 6.7 billion) in FY21 to Rs. 1,03,310 crore (US$ 12.1 billion) in FY24, reflecting an 80% increase.

This import growth is not necessarily a weakness. It showcases a robust and growing domestic automotive industry that demands high-quality parts—many of which are still imported due to technological gaps or cost advantages in other countries.

Top Imported Components

The main categories of imported components are:

• Engine Components

• Body/Chassis/Body-in-White (BIW) Structures

These components are critical for premium vehicle segments and electric vehicles, where India still lags in domestic capabilities.

China's Role as the Top Import Partner

China remains India’s largest supplier, accounting for nearly 23% of India’s automotive component imports. Other countries contributing to India’s imports include Germany, Japan, South Korea, and Thailand. The dependence on imports from China, especially for electronic and EV-related components, highlights the need for India to invest in domestic technology development.

The EV Factor in Export and Import Dynamics

India’s focus on electric vehicle (EV) production is influencing both export and import trends. On one hand, India is beginning to export EV-specific components, such as battery management systems, electric motors, and power electronics. On the other hand, imports of EV-related parts like battery cells and electronic control units remain high.

Policy Support for Auto Component Sector

Multiple initiatives have supported this sector’s transformation:

• Production Linked Incentive (PLI) Scheme for Auto Components

• Make in India and Atmanirbhar Bharat initiatives

• Faster clearances, ease of doing business reforms

• Support for setting up R&D and Testing Centers

These policies are designed to reduce India’s dependence on imports, enhance local production capabilities, and create a self-reliant supply chain.

India’s Global Outlook: A Long-Term Opportunity

The current momentum in the auto component sector is expected to continue for several reasons:

• Global OEMs are diversifying their supply chains away from China

• India offers stability, skilled labor, and competitive pricing

• Global automotive brands are setting up R&D and sourcing centers in India

• Growing demand for shared mobility, electric mobility, and connected vehicles creates new component needs

Conclusion: India as a Global Auto Component Powerhouse

India’s success story in auto component exports is a result of strong policy support, private sector capabilities, and global trust. With exports growing by 73% in three years, and major destinations like the USA and Europe relying on Made-in-India components, the country is firmly on the path to becoming a global manufacturing hub.

At the same time, rising imports indicate that the domestic industry has room to grow in high-tech areas, especially in EV components, BIW structures, and engine technologies. By closing these gaps, India can reduce import dependence, create more jobs, and further strengthen its position in global trade.

Looking ahead, the Indian auto component sector offers tremendous opportunity—both in terms of export potential and domestic industry growth. For investors, policymakers, and automotive businesses, India’s story is one to watch—and invest in.

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