India’s auto components industry is set for structural growth as global OEMs realign supply chains, says an Avendus report. The country is becoming a preferred global sourcing hub due to its competitive manufacturing ecosystem and cost advantages.
India’s auto components industry is poised for structural growth as global supply chains realign, with process-led manufacturers expected to emerge as key beneficiaries, according to a report by Avendus.
Global Auto Sector Reset Fuels Sourcing Shifts
The report highlighted that the global automotive sector is undergoing a “structural reset,” driven by electrification, cost pressures, and geopolitical shifts, which is prompting original equipment manufacturers (OEMs) to rethink sourcing strategies. “Cost optimization is becoming a strategic imperative… setting in motion a broader realignment of the auto components value chain,” it noted.
India’s Competitive Manufacturing Ecosystem
India is emerging as a key beneficiary of this transformation. The country has built a competitive manufacturing ecosystem over the past three decades and is now being seen as a preferred global sourcing hub. The report stated that “India today offers a compelling combination of scale, cost competitiveness and a deeply entrenched supplier ecosystem,” making it an attractive destination for global OEMs seeking to diversify away from concentrated geographies such as China.
The domestic auto components industry has already crossed USD 80 billion in turnover, growing at over 10 per cent CAGR between FY20 and FY25, and contributes significantly to manufacturing GDP.
Future Growth Drivers: Metal-Forming and Exports
A key driver of future growth will be metal-forming processes, which remain central to both internal combustion engine (ICE) and electric vehicle (EV) platforms. “While product architecture may change with electrification, these legacy metal-forming processes remain indispensable to both ICE and EV platforms,” the report said.
The domestic metal-forming market alone is estimated at around USD 40 billion in FY25, with strong demand across passenger and commercial vehicles.
Looking ahead, the combined domestic and export market for metal-forming components is projected to grow from USD 53 billion in FY25 to USD 94 billion by FY30, at an annual growth rate of around 12 per cent.
Exports are expected to be a major growth lever, supported by global sourcing shifts. “OEMs and Tier-1s in the US and Europe are relocating sourcing to lower-cost, higher-scale markets, making India a preferred alternative,” the report said.
Resilience Through Dual ICE-EV Model
Additionally, India’s dual advantage in serving both ICE and EV segments is expected to provide long-term stability. The report noted that the country is well positioned to capture demand in conventional components while also scaling up EV-related manufacturing, creating a “balanced, transition resilient export model.”
Overall, the report underscored that process-focused manufacturers, backed by strong capabilities and export orientation, are likely to capture a disproportionate share of the opportunity as the global automotive industry undergoes transformation. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)