As the world transitions toward electric mobility, Autonomous Driving , Advanced Driver Assistance Systems (ADAS), the Internet of Things (IoT), and sustainable production, the Indian automotive sector can emerge as a key player in the global value chain (GVC), according to a report by NITI Aayog.
While the local automotive industry, having made significant strides to position India as the world’s fourth-largest automobile producer after China, the US and Japan, its share in the global traded auto component market remains modest at just 3% ($20 billion), reflecting untapped potential and underlying challenges, the report laments.
“With a near-neutral trade balance and a cumulative cost disability of nearly 10% compared to competitors like China, India’s auto component sector faces structural hurdles that impede its competitiveness,” as per the report.
“These include supply chain inefficiencies, high material and equipment costs, and limited penetration in high-precision segments like engine and transmission systems,” according to it.
Envisioning a bold future for India’s automotive component production, the report forecasts that it may reach the size of $145 billion by 2030, with auto component exports tripling to $60 billion, yielding a trade surplus of $25 billion.
Such growth promises to create 2 to 2.5 million additional direct jobs, bolster ancillary industries, and elevate India’s GVC share to 8%, it emphasized.
In a message for the report, NITI Aayog Vice Chairman Suman K. Beri said, “The COVID-19 pandemic revealed supply chain weaknesses, while recent geopolitical uncertainties and resulting disruptions have driven manufacturers to seek more reliable and cost-effective production hubs.”
“In this context, India offers a unique opportunity to emerge as a trusted global manufacturing partner. With its expanding production capabilities, competitive costs, skilled workforce, and growing technological expertise, India is well-positioned to play a larger role in the global automotive supply chain,” he said.
As per the report one of the most significant transformations in the global manufacturing landscape is the increasing interdependence between the automotive industry and advanced sectors such as electronics, semiconductors, and artificial intelligence.
“With the integration of these cutting-edge technologies, the cost of semiconductor chips per vehicle is projected to double, rising from $600 to $1,200 by 2030,” it said.
The global automotive component market was valued at approximately $2 trillion in 2022, underscoring its critical role within the global automotive industry. Of this, around 30%—or $700 billion—constitutes the traded automotive component market.
As per the report achieving this ambition demands a concerted effort to address cost disadvantages, enhance infrastructure, and integrate advanced technologies such as Industry 4.0.
“The shift towards electric vehicles (EVs) and next-generation features like ADAS further underscores the urgency of aligning India’s capabilities with global trends,” the report flags.
To realise this vision, the NITI Aayog has proposed a comprehensive set of fiscal and non-fiscal interventions.
These include targeted operational support for identified components and capital expenditure support for tools and dyes, cluster development to strengthen supply chains, measures for improving R&D and skill-building initiatives to nurture talent.
“Equally critical are measures to foster international collaboration through joint ventures and free trade agreements, alongside efforts to elevate quality standards and build a globally competitive brand for Indian auto Components,” the authority said.
“This holistic approach aims not only to enhance export potential but also to position India as a hub for high-quality, technology-driven manufacturing. The timely implementation of these recommendations offers a powerful pathway to unlock India’s potential, driving economic growth, job creation, and technological advancement,” it added.
Published – April 12, 2025 10:06 am IST
