Auto Component
Introduction
The Indian auto components industry is one of the world's leading auto component sourcing destinations. The industry manufactures a full range of components for automobiles, auto parts, engines, and electricals.
India is home to several global auto component manufacturers and is a preferred sourcing destination for leading OEMs worldwide. The sector contributes about 2.3% to India's GDP and employs around 1.5 million people directly and about 5 million people indirectly.
Market Overview
The Indian auto component industry is expected to reach US$ 200 billion by 2026. The aftermarket is expected to grow to US$ 30 billion by 2026.
India's auto component exports stood at US$ 18.5 billion in FY22. The sector exports to over 180 countries, with North America and Europe being major destinations.
The industry comprises approximately 2,500 firms in the organized sector and 10,000 firms in the unorganized sector. India is the 4th largest auto parts manufacturer in the world.
FDI Policy
100% FDI is allowed under automatic route in auto components manufacturing.
- No minimum capitalization required
- No licensing requirement for manufacturing
- Ease of doing business initiatives
- Strong intellectual property protection
- Special Economic Zones (SEZs) benefits available
Government Support
Government initiatives for the auto component sector:
- Production Linked Incentive (PLI) Scheme for Auto and Auto Components with outlay of US$ 3.5 billion
- FAME II scheme promoting electric vehicle components
- National Automotive Testing and R&D Infrastructure Project (NATRiP)
- Automotive Mission Plan 2016-26 focusing on advanced manufacturing
- Make in India initiative encouraging domestic manufacturing
- Skill development programs for the automotive workforce
Future Prospects
The auto components sector is witnessing significant transformation with focus on electric vehicles, advanced electronics, and lightweight materials. India is positioning itself as a global hub for EV components manufacturing.
The sector offers immense opportunities in areas like battery technology, electric powertrains, advanced driver assistance systems (ADAS), connected vehicle technology, and lightweight materials.
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