India’s auto-component industry is on track to become a global powerhouse, with its market size projected to touch US$ 200 billion by 2030, according to McKinsey’s report, Shaping the Future of India’s Auto-Component Industry Amid Global Trade Shifts.
Global Trade Realignment: A Big Opportunity for India
The report highlights that structural and geopolitical changes are reshaping global trade corridors. Between US$ 12 trillion and US$ 14 trillion worth of trade is expected to shift by 2035. Despite these challenges, global trade is forecasted to grow from US$ 33 trillion in 2024 to US$ 42–45 trillion by 2035, positioning India as a major beneficiary.
India’s auto-component sector has already been growing at a robust CAGR of nearly 10% over the last five years. Domestic sales are projected to rise by 7–8% annually until FY30, driven by:
- Higher vehicle penetration
- Increased parts usage per vehicle
- Adoption of new technologies
Exports: The Next Big Growth Driver
Exports from the sector are projected to touch US$ 70–100 billion by FY30, supported by two key growth pillars:
- Internal Combustion Engine (ICE) Exports: A US$ 20–30 billion opportunity as global markets consolidate.
- Electric Vehicle (EV) Components: A 35% CAGR in domestic EV sales, in line with the worldwide shift towards electrification and connectivity.
Building Supply Chain Resilience
To stay competitive, Indian auto-component companies are doubling down on supply-chain diversification through:
- Localisation of production
- Capacity expansion in low-risk regions
- Multi-sourcing strategies
Global automakers are also actively reducing their dependency on single-source vendors — particularly from China — and shifting to India as a trusted manufacturing hub.
The Road Ahead
With cost competitiveness, a skilled workforce, and strong domestic demand, India’s auto-component industry is well-positioned to become a key global supplier by 2030. The sector’s growth will not only contribute to India’s manufacturing ambitions but also strengthen its role in the evolving global supply chain.
Source:IBEF
