AutoComp India’s automotive components industry, currently valued at USD 74 billion, has consistently achieved a Compound Annual Growth Rate (CAGR) of 7-8% since 2014. This momentum is set to gain even more pace in the coming years, with forecasts suggesting that the sector will double its growth rate by the end of this decade. By 2030, it is expected to generate revenue of USD 200 billion, nearly tripling its current size and establishing a new benchmark for the industry.
This optimistic forecast comes from a joint study titled Scaling Global Competitiveness and Self-reliance, conducted by the Automotive Component Manufacturers Association of India (ACMA) in collaboration with McKinsey. The report highlights the key drivers that are expected to fuel the robust expansion of the industry over the next five years. Among these factors are the increasing premiumisation of vehicles in India, advances in alternative propulsion technologies, and the country’s growing prominence within the global supply chain, which will create substantial opportunities for export growth.
According to the study, sales from India’s automotive component sector to Original Equipment Manufacturers (OEMs) are projected to rise from USD 62 billion in 2024 to USD 89 billion by 2030, representing a CAGR of 6%. Even more impressive is the potential surge in export revenues, which could leap from USD 21 billion in 2024 to USD 100 billion by 2030, translating to a remarkable 30% CAGR.
Domestically, the expanding vehicle population presents a strong opportunity for the automotive aftermarket sector. This segment is expected to grow to USD 16 billion, driven primarily by the passenger vehicle (PV), commercial vehicle (CV), and two-wheeler markets. This growth reflects the strength of India’s domestic market, which continues to be a critical component of the industry’s success.
Although the Indian automotive components industry currently accounts for only about 3.5% of the global auto components market, it contributes significantly to the national economy, making up around 25% of India’s manufacturing GDP. Despite the disruptions caused by the COVID-19 pandemic in 2020, the industry has demonstrated remarkable resilience, bouncing back to register significant growth in recent years. However, certain segments, particularly two-wheelers, continue to face challenges in achieving higher growth rates.
The past decade has seen the components sector thrive, supported by a resilient aftermarket and the expansion of exports. From 2019 to 2024, the industry generated an estimated USD 88 billion in foreign exchange through component exports, leading to a trade surplus of USD 300 million, a clear indication of its strong performance.
The report also suggests that the Indian automotive industry is on the verge of substantial expansion. By 2030, the number of households in India with an annual income exceeding USD 25,000 is expected to triple. This increase in disposable income, along with rising urbanization (projected to reach around 40%), is likely to fuel significant demand for passenger vehicles and light commercial vehicles (LCVs). Moreover, rural incomes are expected to rise by 25% by 2030, which will drive demand for two-wheelers and entry-level passenger vehicles in rural areas.
Technological innovations and emerging trends are poised to shape the future of the automotive industry. While internal combustion engines (ICE) are dominant today, the industry is witnessing the emergence of nine alternative powertrains, including CNG, flex-fuel, and electric vehicles (EVs). These alternative powertrains are expected to increase demand for specialized components such as electric motors and lithium-ion batteries, particularly as EVs, hybrids, and fuel-cell vehicles gain traction in the market.
The report predicts that domestic EV demand in India will be primarily driven by electric two-wheelers, which will account for approximately 55% of the total demand for lithium-ion cells. Electric four-wheelers, on the other hand, are expected to see EV penetration levels reach up to 15% by 2030, making them the second-largest consumers of lithium-ion batteries due to their larger battery requirements.
The total demand for lithium-ion batteries is projected to reach 100 GWh by 2030, unlocking opportunities across the entire lithium-ion value chain. This includes raw material refining, the production of active materials and cell components, cell manufacturing, battery packaging and integration, and battery recycling. To capitalize on these opportunities, India could tap into its domestic lithium reserves, particularly in Jammu & Kashmir, while also forging import partnerships with countries like Australia, Chile, and Congo.
India’s rising demand for lithium presents an opportunity for the country to develop upstream capabilities in the lithium-ion value chain. This can be achieved through technology partnerships, government support, and incentives such as the Production Linked Incentive (PLI) schemes for advanced battery chemistry and end-of-life battery recycling, as highlighted in the report.
The study also underscores the growing trend of premiumisation in the automotive sector, particularly in two-wheelers and passenger vehicles. As consumers increasingly demand advanced software-driven features and regulatory bodies push for enhanced safety functionalities, the demand for sophisticated automotive components is set to rise. This focus on software is expected to intensify as the industry moves toward zonal electrical and electronic (E/E) architectures, enabling greater vehicle functionality.
Software-defined vehicles (SDVs) are likely to create new opportunities for automotive component manufacturers, enabling them to expand their role beyond traditional components such as chassis, powertrains, and cockpits. In addition to hardware, component makers will increasingly be involved in developing the software systems that control these parts, paving the way for a more integrated approach to vehicle manufacturing.
As EVs and feature-rich vehicles are expected to be major contributors to the industry’s growth by the end of the decade, electronic components will play a critical role in meeting domestic OEM demand. While components such as sensors, cameras, and other electronics are already being manufactured locally, India still relies on imports for semiconductors and printed circuit boards (PCBs). However, the report highlights promising signs of progress toward localizing the production of electronics in India, with sensor and electronic control unit (ECU) manufacturers increasing their presence in the country.
Looking forward, the report identifies key areas that must be addressed to unlock the full growth potential of India’s automotive components industry. The shift to alternative powertrains, for example, presents an unprecedented opportunity for Indian component suppliers to scale up and compete on the global stage. By focusing on high-value components such as exhausts, cabin parts, and load-body components, Indian manufacturers can build a competitive edge.
Exports are another critical growth lever. With strong demand expected from North America and Europe, Indian automotive component exports are projected to grow fivefold, from USD 20 billion in 2023 to USD 100 billion by 2030. The North American market, in particular, holds significant potential, with exports from India anticipated to rise from USD 6 billion in 2023 to USD 40 billion by 2030. Similarly, exports to Europe are expected to grow from USD 6 billion to USD 35 billion, while those to Latin America are forecast to increase from USD 2 billion to USD 13 billion by the decade’s end.
Innovation and investment in research and development (R&D) are also essential for the sector’s growth. By forming strategic alliances and accelerating local product development, Indian component manufacturers can position themselves to offer cutting-edge products. Establishing design and skill centers and fostering collaboration with startups will be crucial to reducing time to market in an increasingly competitive and disruptive global landscape.
The report concludes that the Indian automotive components industry is at a pivotal juncture, buoyed by favorable tailwinds such as a growing export market and a booming domestic demand. By aligning these growth drivers with a collaborative, multi-stakeholder approach that emphasizes innovation, R&D, and quality improvements, India’s automotive component sector is well-positioned to achieve its ambition of becoming a global manufacturing hub by 2030.
