India’s role in the global automotive value chain

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India’s automotive industry has become one of the strongest pillars of its manufacturing sector, fueling economic growth and industrial development. Contributing approximately 7.1% of India’s GDP and nearly half of its manufacturing GDP, the sector is a key driver of employment, technology advancement, and exports. With a market value of around US$100 billion, India already holds more than 3% of the global auto components market and nearly 3% of worldwide auto component exports.

In FY 2023–24, India produced over 28 million vehicles, including passenger cars, commercial vehicles, two- and three-wheelers, and quadricycles, making it the fourth-largest vehicle producer worldwide, behind only China, the U.S., and Japan.

A critical link in the industrial ecosystem

India’s automotive industry doesn’t operate in isolation, it connects deeply with multiple other sectors, creating significant backward and forward linkages. It drives demand for steel, rubber, glass, electronics, and IT services, helping stimulate growth across the economy.

• Electronics and IT: With government-backed initiatives like PLI, India is working to localize the production of automotive electronics, cutting dependence on imports and boosting domestic capabilities.
• Steel: India is the second-largest steel producer globally, with 15% of output going into vehicle manufacturing.
• Rubber and plastics: Nearly 50% of India’s natural rubber production serves the auto sector, particularly for tires, hoses, and seals.
• Automotive glass: India is now among the largest automotive glass markets in the Asia-Pacific region, reaching a value of US$908 million in 2024.

Growing strength in auto components

India’s expanding auto components sector presents a strategic opportunity to strengthen its role in the global automotive value chain. Although currently accounting for about 3% of global auto component exports, India’s competitive manufacturing base and cost advantages position it well for future leadership.

Exports of automotive components have grown significantly — from $7.4 billion in FY21 to $12.8 billion in FY24 — marking a 73% increase since FY21. This surge reflects both post-pandemic recovery and rising global demand. Key export categories include Drive Transmission Systems, Engine Components, and Electrical & Electronics, which together make up 53% of total exports.

India’s auto components sector has become a key growth driver and a strategic opportunity for global OEMs. Exports have risen sharply from, US$7.4 billion in FY21 to US$12.8 billion in FY24, a 73% increase. The top export categories are drive transmission systems, engine components, and electrical & electronic parts, which together make up over half of total exports.

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Written by Anuj Kumar, Senior Consultant based in the India office.