Innovation and Localization Fuel India’s Auto Component Industry Growth

India’s auto component industry is entering a defining chapter, one that blends global challenges with domestic momentum. As trade tensions reshape supply chains and dependence on rare earth metals tests manufacturing resilience, the industry is finding strength in innovation, localisation, and digital transformation. 

Backed by record vehicle production and strong policy support, India’s automotive component ecosystem is evolving from being a cost-driven supplier to a technology-led manufacturing hub.

Capturing this transformation, Rubix Data Sciences, a risk management and monitoring firm, has released its October 2025 Industry Insights Report on Automotive Components. The report analyses how the industry is navigating global disruption and emerging as a core pillar of India’s manufacturing growth story.

Growth and Global Positioning

According to the Rubix Data report, India’s auto component industry turnover rose 8.2 percent year-on-year to USD 80.2 billion in FY2025, supported by a 9 percent rise in vehicle production to 31 million units. 

The industry’s outlook remains strong, with NITI Aayog projecting turnover to reach USD 145 billion by 2030, positioning India as a key player in global automotive supply chains.

India’s share in globally traded components, currently around 3 percent, is expected to rise to 8 percent by 2030, while exports are forecast to triple to USD 60 billion. This growth trajectory is being powered by local value addition, EV expansion, and precision manufacturing upgrades supported by government incentives. Much of this future growth, however, hinges on how the ongoing US tariff scenario evolves, the report noted.

Trade Balance Turns Positive

India’s auto component trade balance turned positive for the first time in FY2024 with a small margin and widened in FY2025. Exports reached USD 22.9 billion, surpassing imports of USD 22.4 billion, resulting in a USD 0.5 billion trade surplus. Since FY2021, exports and imports have grown at compound annual growth rates of 15 percent and 13 percent respectively, reflecting robust manufacturing competitiveness.

The report cautions that potential US tariffs of up to 50 percent on imported components could impact nearly 20 percent of India’s exports to the American market. The US currently accounts for 27 percent of India’s outbound shipments. Nevertheless, the industry is offsetting risks through a stronger domestic base, deeper ties with Europe and ASEAN, and a growing focus on higher-value products.

Building Resilience in the Supply Chain

A key vulnerability highlighted by the Rubix report is India’s reliance on China for rare earth magnets, which are essential for electric and hybrid vehicles. 

In FY2025, India imported USD 221 million worth of rare earth magnets, more than 80 percent of which came from China. Beijing’s new export licensing rules and end-user certification requirements have raised concerns over supply continuity.

In response, the Indian Government plans to triple incentives to INR 70 billion to develop domestic rare earth metal capacity and diversify sourcing from countries such as Australia, Vietnam, and South Africa. These moves indicate a decisive step towards strategic self-reliance and reduced import dependency in critical technologies.

The Transformation of Mobility

Beyond traditional manufacturing, the report captures the accelerating digital transformation within the industry. The software-defined vehicle (SDV) market in India is expected to expand from USD 18.2 billion in 2025 to USD 69.5 billion by 2031, growing at a 24.9 percent compound annual growth rate. 

Under the Digital Personal Data Protection (DPDP) Rules 2025, OEMs and component makers will need to implement rigorous data protection and cybersecurity frameworks, redefining how they manage connected mobility ecosystems.

This evolution is transforming component manufacturers from hardware suppliers into integrated technology partners, enabling them to play a central role in shaping the future of automotive mobility.

The Rubix report notes several strategic expansions across major industry players, including Bharat Forge (AAM India acquisition), Bosch, Gabriel India, Exide Industries, Uno Minda, Minda Corporation, and Greaves Cotton. These companies are intensifying their localisation efforts, expanding production capacity, and driving innovation in EV and intelligent component technologies.

Such developments mark a shift from cost-driven supply strategies to technology-led growth and deeper global integration.

“India’s auto component industry is moving beyond scale to substance,” said Mohan Ramaswamy, Co-founder and CEO of Rubix Data Sciences. “Even though global trade challenges continue, the industry’s strong domestic demand, growing localisation, and increasing digital readiness are laying a solid foundation for long-term competitiveness. The real opportunity now lies in how companies strengthen their supply chains, invest in innovation, and use risk intelligence to guide their global strategies,” he added.