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Home Manufacturing

Manufacturing: $145bn auto components production

Fiinews by Fiinews
April 13, 2025
in Manufacturing
Reading Time: 4 mins read
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Niti Aayog launched auto component report on 11 April.

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India fourth-largest global producer of automobiles

NITI Aayog’s vision for India’s automotive sector by 2030 is ambitious yet achievable, according to a recent report which envisions the country’s automotive component production growing to US$145 billion, with exports tripling from US$20 billion to US$60 billion http://niti.gov.in.

This growth would lead to a trade surplus of approximately US$25 billion and a significant increase in India’s share of the global automotive value chain, from 3% to 8%, said the NITI Aayog’s report titled “Automotive Industry: Powering India’s Participation in Global Value Chains” https://www.investindia.gov.in/.

The report was launched on 11 April by Suman Bery, Vice Chairman, NITI Aayog, in presence of Dr V.K. Saraswat, Member, NITI Aayog, Dr Arvind Virmani, Member, NITI Aayog, and BVR Subrahmanyam, CEO, NITI Aayog https://fieo.org/.

“This report offers an extensive analysis of India’s automotive sector, highlighting both opportunities and challenges, and outlining a pathway for positioning India as a key player in global automotive markets,” said NITI Aayog.

Global and Indian Automotive Landscape

In 2023, global automobile production reached approximately 94 million units. The global automotive components market was valued at US$2 trillion, with the export share reaching approximately US$700 billion.

India has emerged as the fourth-largest global producer after China, USA and Japan, with an annual production of nearly 6 million vehicles. The Indian automotive sector has gained a strong domestic and export market presence, particularly in the small car and utility vehicle segments, said the report https://www.makeinindia.com/home/.

Supported by initiatives like ‘Make in India’ and its cost-competitive workforce, India is positioning itself as a hub for automotive manufacturing and exports, it added.

The automotive industry is undergoing a transformative shift towards electric vehicles (EVs), driven by rising consumer demand for sustainable mobility, regulatory pressures to reduce carbon emissions, and advancements in battery technology. EV sales have surged globally, reshaping the automotive manufacturing landscape, according to the report.

Battery manufacturing hubs are emerging in regions like Europe and the US, spurring investments in industries related to lithium and cobalt mining, essential for EV production. These developments are altering traditional supply chains and creating new opportunities for collaboration and competition.

In parallel, the rise of Industry 4.0 is transforming automotive manufacturing. Technologies such as Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), and robotics are enhancing production processes, improving productivity, reducing costs, and enabling greater flexibility. These digital advancements are not only optimizing manufacturing but also fostering new business models centered around smart factories and connected vehicles https://sbi.com.in/.

Despite being the fourth-largest automobile producer globally, India has a modest share (around 3%) in the global automotive component trade, which amounts to approximately US$20 billion, according to the report.

The bulk of global trade in automotive components is driven by engine components, drive transmission, and steering systems, but India’s share in these high-precision segments remains low at just 2-4%. India’s automotive sector faces challenges on account of operational cost, infrastructural gaps, moderate GVC integration, inadequate R&D expenditure etc. that hinder its competitiveness in the global value chain (GVC).

The NITI Aayog’s report outlines several strategic fiscal and non-fiscal interventions aimed at enhancing India’s global competitiveness in the automotive sector. The interventions are structured across four categories of automotive components based on their complexity and manufacturing maturity i.e. Emerging & Complex, Conventional & Complex, Conventional & Simple and Emerging & Simple.

Operational Expenditure (Opex) Support: To scale up manufacturing capabilities, with a focus on capital expenditure (Capex) for tooling, dies, and infrastructure.

Skill Development: Initiatives to build a talent pipeline critical for sustaining growth.

R&D, Government facilitated IP transfer and Branding: Providing incentives for research, development, international branding to improve product differentiation and empowering MSMEs through IP transfers.

Cluster Development: Fostering collaboration between firms through common facilities such as R&D and testing centers to strengthen the supply chain https://www.commerce.gov.in/.

Non-Fiscal Interventions

Industry 4.0 Adoption: Encouraging the integration of digital technologies and enhanced manufacturing standards to improve efficiency.

International Collaboration: Promoting joint ventures (JVs), foreign collaborations, and free trade agreements (FTAs) to expand global market access.

Ease of Doing Business: Simplifying regulatory processes, worker hour flexibility, supplier discovery & development and improving business conditions for automotive firms. Fiinews.com

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