India’s component moment
At the very outset, it is worth noting that the Indian automobile industry has achieved remarkable scale and can arguably be considered the second most important in the world in terms of vehicle production. During the calendar year 2025, India produced more than 30 million vehicles, comprising approximately 24.5 million two- and three-wheelers, 5 million passenger cars, with the remainder consisting of commercial vehicles.
In global comparison, only China surpasses India in total vehicle output, which highlights the immense size and potential of India’s automotive sector. Naturally, one might logically assume that India’s component industry – the critical backbone supplying these vehicles – should hold the same global significance. However, this has not entirely been the case, particularly from an export perspective, as India’s component exports have not grown as robustly as they could have, given the size of the domestic automotive manufacturing ecosystem.
Nevertheless, the Indian component industry, which spans automotive parts, electronics, semiconductors, as well as the closely related space of aerospace components, wind and renewable energy parts, and various other industrial segments, is currently positioned at a significant inflexion point.
Supported by strategic government policies (even if some of it is inconsistent), evolving global supply chains, and rising domestic demand, the industry is transitioning from being primarily assembly-focused to becoming increasingly value-adding and export-oriented, signalling its gradual integration into global manufacturing networks.
The scale and economic importance of India’s component sector cannot be overstated. Within the broader component ecosystem, the auto component industry remains one of the largest and most influential segments. In fiscal year 2025, the auto component industry achieved a turnover of approximately ₹6,73,000 crore (around $78.7 billion), reflecting a compound annual growth rate (CAGR) of 14 per cent between FY 2020 and FY 2025. Both exports and domestic supplies to Original Equipment Manufacturers (OEMs) continue to play a vital role in driving manufacturing growth and strengthening India’s industrial base.
Industry analysts and experts project that the auto components market could expand to around $145 billion by 2030, highlighting its potential to emerge as a significant global supplier. At the same time, electronics components, though still in a relatively early stage, are expected to experience dramatic growth.
Projections suggest that the electronics component segment could reach $240 billion by 2030, generating substantial employment opportunities and contributing meaningfully to India’s industrial output. Across all component sub-ecosystems, micro, small, and medium enterprises (MSMEs) play a crucial role, accounting for a significant share of manufacturing output, exports, and employment, while also ensuring resilience across the supply chain.
India’s policy framework in recent years has been sharply focused on promoting domestic component manufacturing, with special emphasis on the electronics and semiconductor sectors. Initiatives such as the Electronics Component Manufacturing Scheme (ECMS) have encouraged the production of critical parts including printed circuit boards (PCBs), camera modules, resistors, capacitors, and battery components by providing substantial fiscal incentives.
The most recent 2026 Union Budget further reinforced this commitment, expanding funding for electronics and semiconductor ambitions through the India Semiconductor Mission (ISM) 2.0 and a dedicated Rs 40,000 crore outlay for component manufacturing. These initiatives are designed to strengthen technological capabilities, promote localised value addition, and facilitate integration into global supply chains, particularly for semiconductors and high-tech electronics, where India has traditionally relied heavily on imports.
However, the PLI schemes for auto components have so far fallen short of attracting significant investments or generating substantial employment. These policy measures were meant to reflect India’s broader strategic intent to not only reduce import dependence but also embed domestic suppliers within global value chains, particularly in segments that have historically been dominated by East Asian producers.
The Indian auto component industry has exhibited steady growth alongside rising vehicle production and the adoption of electric vehicles (EVs). While the growth has been most pronounced in the two- and three-wheeler segments, passenger car growth has been relatively modest – in fact, for most enthusiasts for clean energy, the growth has been very disappointing, despite all the brouhaha made by Nitin Gadkari a decade ago as to how India would be 100 per cent EV by 2030, which given current figures is an impossibility.
During FY 2024-25, the industry expanded by 11.3 per cent, supported by robust supplies to OEMs and moderate export growth. The industry’s contribution to GDP, employment, and exports has established it as a cornerstone of India’s manufacturing ecosystem. Moreover, the sector is increasingly producing higher-value components, such as EV powertrain parts, advanced electronics, transmission systems, and safety systems, moving beyond traditional mechanical parts and reflecting both market evolution and technological upgrading.
Despite progress in consumer electronics assembly, component-level production remains heavily dependent on imports, with 80-85 per cent of vital parts such as PCBs and semiconductors sourced from China. To address this imbalance, India has implemented policies offering subsidies and incentives exceeding 100 per cent of eligible investments in priority areas. These efforts aim to transform India from a major assembler to a competitive component manufacturing hub integrated into global supply chains. The success of this transformation, however, remains to be fully realised.
Another noteworthy trend is the diversification of Indian auto component manufacturers into related industries, leveraging existing capabilities developed for vehicle manufacturers. A key beneficiary of this diversification is the wind energy sector, where India is emerging as a global hub for wind power component exports, with substantial production capacity in blades, nacelles, towers, and gearboxes.
Similarly, in aerospace, suppliers such as the JK Maini Group are increasingly producing sub-assemblies and components for global OEMs, including Airbus, signalling growing demand for precision and quality engineering. Even if auto components may constitute the majority of turnover for the JK Maini Group, aerospace and renewable energy components are contributing higher-margin revenues while providing cross-benefits in technology, reputation, and credibility.
These developments highlight the ongoing diversification of the component industry beyond automotive and consumer electronics.
Despite this momentum, several challenges remain. The Indian component industry needs to invest significantly in R&D and frontier technologies to prepare for the next generation of mobility solutions, rather than focusing solely on present demands. There is also a need for a unified industry vision, where the mobility ecosystem functions cohesively with a single agenda, narrative, and representative body.
Moreover, import dependence remains high, particularly in critical segments such as semiconductors and electronic sub-assemblies. The value addition gap is another concern: while India assembles large volumes of finished products, domestic value addition in components remains relatively low due to technological barriers and scale inefficiencies.
Additionally, there is a shortage of skilled manpower and advanced technological capability, which are essential to achieving global competitiveness in cutting-edge component manufacturing. Government incentives and industry investments are attempting to address these gaps, but further development of the ecosystem is essential.
Looking ahead, the prospects and strategic outlook for the Indian component industry are highly positive. The sector is increasingly aligning with global supply chain shifts, particularly under the ‘China +1’ strategy, which is opening opportunities for India to attract manufacturing and export flows. Export patterns are beginning to evolve, with Indian suppliers already shipping components for multinational companies such as VinFast and other manufacturers in Vietnam, signalling early stages of global integration beyond domestic assembly orders.
With sustained policy support, continued capital investment, and innovation by the private sector, projections suggest that auto component exports could triple by 2030, while electronics component demand could reach tens to hundreds of billions of dollars over the same period. This trajectory positions India to play a pivotal role in regional and global component supply chains, reduce import dependence, and enhance technological capabilities across industries.
Today, the Indian component industry stands at a crossroads of growth and transformation. Fuelled by government initiatives such as ECMS, ISM 2.0, and strategic private-sector investments, the industry is steadily moving from low-value assembly operations toward higher-value, technologically sophisticated manufacturing.
While challenges remain, including reliance on foreign inputs and the need to enhance technological and skills capacity, the combination of policy support, investment, and global integration indicates that India’s component sector is well-positioned to emerge as a competitive and influential node in global manufacturing ecosystems over the coming decade.