Auto Components Industry in India: Sector Overview and Business Opportunities

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The auto components industry in India is one of the fastest-growing sectors contributing significantly to the country’s economy, employment, and manufacturing capabilities. As the backbone of the automotive industry, this sector provides essential parts and assemblies to vehicle manufacturers (OEMs), catering to both domestic demand and international markets.

With the advent of electric mobility, digitalization, and rising vehicle ownership, the Indian auto components market is undergoing a transformation—becoming more integrated, technologically advanced, and globally competitive. According to the Automotive Component Manufacturers Association (ACMA), the Indian auto components industry recorded a revenue of over INR 5.6 lakh crore (USD 69.7 billion) in FY 2023, showcasing double-digit growth and immense potential.

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Overview of India’s Auto Components Industry

India’s auto components sector includes a wide range of product categories like engine parts, transmission components, chassis systems, braking systems, suspension & steering, electronics, and body parts. The industry serves three primary markets:

Original Equipment Manufacturers (OEMs) – Domestic and international vehicle manufacturers
Aftermarket (Replacement Market) – Repair, maintenance, and customization
Export Market – Over 160 countries, including the USA, Europe, Latin America, and ASEAN nations

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Market Snapshot:

Contribution to India’s GDP: ~2.3%
Employment generation: Over 5 million direct and indirect jobs
Exports (FY23): USD 20.1 billion
Import (FY23): USD 17.3 billion
Major segments: Two-wheelers, passenger vehicles, commercial vehicles, tractors, EVs

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1. Key Segments of Auto Components Manufacturing

a. Engine & Engine Parts

Pistons, crankshafts, valves, camshafts, fuel injection systems
Core to ICE (Internal Combustion Engine) vehicles
Major demand from two-wheeler and passenger car segments

b. Transmission & Drivetrain

Gears, axles, clutches, differential assemblies
Significant for vehicle mobility and performance
Dominated by precision engineering firms

c. Suspension & Steering Systems

Leaf springs, control arms, steering columns
Crucial for vehicle safety, stability, and comfort
Demand from both OEMs and aftermarket

d. Brake Systems

Brake pads, discs, calipers, master cylinders
Growing emphasis on anti-lock braking systems (ABS)
EV adoption increasing demand for regenerative braking parts

e. Electrical & Electronic Components

Batteries, alternators, ECUs, sensors, infotainment systems
The fastest-growing segment due to EVs and ADAS (Advanced Driver Assistance Systems)

f. Interior and Exterior Body Parts

Instrument panels, bumpers, dashboards, mirrors, handles
Increasing demand from personalization and vehicle design trends

2. Trends Shaping the Auto Components Industry

a. Electrification of Vehicles

The shift toward electric vehicles (EVs) is creating new demand for components such as lithium-ion battery packs, motors, EV-specific ECUs, and lightweight materials.

b. Localization and Atmanirbhar Bharat

Driven by import substitution, PLI schemes, and Make in India initiatives, many companies are now focusing on local manufacturing of critical components.

c. Digitalization and Industry 4.0

Automation, robotics, IoT, and AI are transforming manufacturing processes—enhancing productivity, quality, and supply chain integration.

d. Sustainability and Green Manufacturing

Eco-friendly materials, emission reduction technologies, and recyclable parts are becoming a priority for global compliance.

e. Rise of Startups and Tier-2 Suppliers

Smaller firms and startups are innovating in electronics, telematics, and aftermarket accessories, especially in the EV and connected car domains.

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3. Government Policies Supporting Auto Component Manufacturing

India’s policy framework is highly supportive of the auto component sector:

a. PLI Scheme for Auto and Auto Components

Total outlay: INR 25,938 crore
Focus on advanced automotive technology (AAT) components and EV parts
Incentives based on incremental sales and localization

b. FAME-II Scheme

Pushes demand for EVs and therefore EV-specific components

c. Scrappage Policy

Increases demand for newer, efficient, and emission-compliant components

d. 100% FDI in Auto Components

Encourages global companies to set up manufacturing plants in India

4. Major Hubs for Auto Components in India

India has developed several regional clusters that form the backbone of this sector:

Region	Major Cities	Specialization
North India	Gurugram, Manesar, Noida	OEM suppliers, electronics, body parts
West India	Pune, Aurangabad, Rajkot	Engine parts, gears, suspension
South India	Chennai, Hosur, Bengaluru	Precision, electronics, export units
East India	Jamshedpur, Kolkata	Heavy vehicles, steel forging

5. Export Opportunities for Indian Auto Component Manufacturers

India’s auto components exports have grown steadily over the last decade, thanks to cost competitiveness, engineering capabilities, and global quality certifications.

Top Export Products:

Engine parts
Drive transmission parts
Bearings
Electricals and lighting
Body and chassis parts

Major Export Destinations:

United States
Germany
Brazil
UK
Thailand
Bangladesh
UAE

Exporters benefit from FTAs (Free Trade Agreements), MEIS/RODTEP schemes, and customs simplifications.

6. Challenges in the Auto Components Sector

Despite strong growth, the industry faces the following challenges:

Global supply chain disruptions due to geopolitical tensions
Price volatility in raw materials like steel, aluminum, and plastics
Skilled manpower shortages in precision engineering and electronics
Slow EV adoption compared to projections
Compliance pressure with global emission norms (BS-VI, Euro 7)

Investments in R&D, automation, workforce training, and diversification into EV and connected tech are critical to long-term sustainability.

7. Opportunities for New Businesses and Startups

For entrepreneurs, Tier-2 & Tier-3 vendors, and MSMEs, the auto components sector offers several promising business models:

CNC and precision machining units
Sheet metal fabrication and laser cutting shops
Plastic injection molding for auto interiors
Battery management systems (BMS) for EVs
Telematics devices, sensors, and IoT solutions
Aftermarket spare parts manufacturing
Export-oriented component packaging & logistics

Initial investments range from ?25 lakhs (small parts) to ?5 crore+ for advanced electronics or engine components.

8. Leading Indian Auto Component Companies

Bosch India
Minda Industries
Sundaram Clayton
Endurance Technologies
Varroc Engineering
Uno Minda
Sona BLW Precision Forgings
ZF India

These companies supply components to top automotive brands like Maruti Suzuki, Tata Motors, Hyundai, Mahindra, and international OEMs.

Conclusion

The auto components industry in India is not just a feeder industry to OEMs—it is a standalone powerhouse driving innovation, exports, and employment. As India transitions toward cleaner mobility and high-tech vehicles, the demand for smart, efficient, and sustainable components is bound to increase.

With strong government backing, local expertise, and growing global confidence, this sector presents tremendous opportunities for manufacturers, exporters, and entrepreneurs to invest, innovate, and lead.

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