India’s component manufacturing sector, a vital pillar of the country’s industrial ecosystem, is poised to tap into unprecedented opportunities due to rising global trade deals, supply chain realignments, and an evolving geopolitical landscape. With a manufacturing base spanning traditional automotive parts to cutting-edge electric vehicle (EV) components and electronics, India stands on the cusp of becoming a preferred global supplier.
Scale and Growth of India’s Component Sector
India’s auto component sector continued its strong performance in FY 2024–25, with exports rising 8% to USD 22.9 billion, up from USD 21.2 billion in FY 2023–24, according to ACMA and IBEF (August 2025). Imports also grew 7.3% to USD 22.4 billion, resulting in an almost neutral trade balance and a small surplus of USD 453 million. North America accounted for around 32% of exports, while Europe and Asia remained key markets, though Europe saw some volatility due to geopolitical factors.
The industry’s overall turnover reached ₹6.73 lakh crore (USD 80.2 billion) in FY25, marking a 9.6% year-on-year growth and a 14% CAGR from FY20 to FY25. Domestic OEM supply rose 10% YoY to ₹5.7 lakh crore, driven by higher vehicle production and increased demand for value-added components.
According to Invest India’s EV ecosystem report (2025), the Indian EV component sub-sector's market size is estimated to be closer to USD 6–7 billion in 2025, with an expected CAGR of over 17% through 2033. The global thrust on electric mobility, driven by environmental concerns and regulatory changes, creates massive export opportunities in batteries, motors, and power electronics manufactured by Indian firms.
Global Trade Deals: Opportunities for Expansion
India is actively negotiating and entering into Free Trade Agreements (FTAs). These agreements grant India tariff concessions, market access, and harmonised standards that will significantly enhance the competitiveness of Indian components in global supply chains.
The evolving geopolitical environment, including supply chain diversifications away from China (China+1 strategy), positions India as an attractive alternative manufacturing destination. Global auto manufacturers are increasingly scouting Indian suppliers to mitigate risks while leveraging cost advantages and quality manufacturing capabilities.
Government Initiatives Shaping the Sector
Government initiatives play a crucial role; the Production Linked Incentive (PLI) scheme for automobile and auto components, announced with an outlay of ₹25,938 crore (USD 3.03 billion) from FY23 to FY27, is expected to attract fresh investments exceeding ₹42,500 crore (USD 4.9 billion) during this period. This scheme incentivises the production of advanced components such as electric motors, fuel cells, and automatic transmissions.
In the FY 2024–25 Budget, the government revised the FAME II allocation to ₹2,671 crore. The scheme is now being transitioned into the broader EV Transition Scheme from FY 2025–26, and extended as FAME III (also referred to as the PM E-Drive Programme) with a total outlay of ₹10,900 crore for FY 2025–27, aimed at accelerating electric mobility adoption across the country.
Infrastructure programs, ease of doing business reforms, and specialised automotive component clusters in Maharashtra, Tamil Nadu, Gujarat, and Madhya Pradesh are catalysing the sector’s growth, ensuring supply chain robustness and compliance with international quality and environmental standards.
Besides this, additional support, such as 100% FDI under the automatic route for auto components sectors, export benefits like Duty-Free Replenishment Certificate (DFRC), and national testing centres under NATRiP, facilitate technology upgradation and competitiveness.
Investment optimism is buoyed by large commitments from industry majors for setting up manufacturing units for EV components and advanced automotive parts. For instance, states like Maharashtra witnessed private investments above ₹2,000 crore (USD 240 million) in electric component production.
The Road Ahead
While opportunities are plentiful, India faces challenges, including technology gaps, the need for skilled manpower, infrastructure constraints, and navigating complex global trade regulations. However, the country’s growing domestic market provides scale advantages and a strong foundation to compete globally.
Projections suggest India’s automotive and EV component exports could reach between USD 70 to 100 billion by 2030, with emerging strengths in electric mobility components, semiconductors, and connected vehicle technologies lending fresh dynamism to the sector.
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