India's automotive components industry is projected to surpass $80.1 billion in revenue by FY2025, with exports already reaching $21.2 billion, according to B2B risk management consultancy Rubix Data Sciences. Since FY2020, the country's production of automotive components has grown at a compound annual growth rate (CAGR) of 8 per cent, while exports have expanded at a faster pace, with a 10 per cent CAGR over the same period. 

A key trend highlighted in the report is the significant growth of the electric vehicle (EV) components sector, which saw its share of total production double to 6 per cent in FY2024. Battery technology and powertrain systems have become crucial, accounting for 45 per cent of EV manufacturing costs. India's EV market, bolstered by the EV 30@30 initiative, has experienced a remarkable 76 per cent CAGR in sales from FY2020 to FY2024, with expectations for continued growth, the report notes.

The Indian government's push for localisation and self-reliance has prompted substantial investments in domestic manufacturing. Between FY2020 and FY2024, exports grew at a 10 per cent CAGR, reaching $21.3 billion, with the US being the largest market. Additionally, a trade surplus of $300 million in FY2024 highlights India's evolving role in global automotive supply chains.

The report also underscores the growing focus on technology upgrades and modernisation, with Indian manufacturers committing between $2.5 billion and $3 billion toward capacity expansion and innovation. This includes meeting the rising demand for advanced components such as electric motors, Advanced Driver Assistance Systems (ADAS), and lightweight materials. The ADAS market, in particular, is expected to grow sixfold, from $169 million in FY2023 to nearly $1 billion by FY2028.

Rubix Data Sciences co-founder and CEO Mohan Ramaswamy said, "India is rapidly becoming a vital player in the global automotive supply chain, thanks to robust growth in vehicle production, strong government support, and the unwavering commitment of component manufacturers - including a vibrant network of SMEs - to quality and innovation. We believe this momentum will position India as an indispensable sourcing hub for global OEMs, especially as the industry seeks reliable, diversified alternatives."

Policies such as the PLI scheme, the PM e-Bus Sewa initiative, and the Vehicle Scrappage Policy are playing a crucial role in driving growth within the automotive sector. The PLI scheme, in particular, aims to create substantial employment opportunities while enabling economies of scale in advanced automotive technologies. The Automotive Mission Plan 2047 outlines ambitious goals, including achieving a 50 per cent export share of automotive vehicles and components by 2047, positioning India as a global manufacturing leader, the report highlights.

Despite these positive developments, the industry faces several challenges. Increasing imports of EV components from China and the need to comply with stricter BS VII emissions standards are notable hurdles. Additionally, small and medium-sized enterprises (SMEs), which represent nearly 80 per cent of the sector by volume, are struggling to modernise and transition to electric vehicles, the report observes.

The report stresses the importance of innovation in areas such as lightweight materials, emission control systems, and advanced manufacturing techniques to remain competitive. 

India's automotive components industry is emerging not only as a key driver of the domestic economy but also as an increasingly influential player in global supply chains. With projections for ADAS investments to grow sixfold to $1 billion by FY2028 and the aftermarket segment expected to reach $14 billion by 2028, driven by the rise in pre-owned vehicle sales and a growing vehicle parc set to exceed 340 million units by 2028, the future of India's automotive components sector looks promising, the report concludes.