India has become one of Asia’s largest auto hubs and is forecast to become a key player in global auto supply chains. The country’s auto industry is currently dominated by foreign players, but local companies are growing rapidly and their market share is expected to increase rapidly over coming years. In 2016, India produced almost 18 million vehicles, up from fewer than two million two decades ago. By 2020, total production is expected to reach 21 million units.

The Indian auto components industry has shown impressive growth in the past decade, both in terms of production and exports. With the recent progress of an Indian auto industry and government policies, the future prospects of this industry are also promising. The Indian auto components market is currently valued at USD 5 billion with an estimated growth rate of 20% by 2020.

The Indian Auto Components Industry

India’s automobile industry ranks third in terms of production capacity, having surpassed Japan as well as Russia. After a decline in vehicle sales, mainly due to slow sales of commercial vehicles and trucks, last year showed an increase in vehicle production by both passenger car and commercial truck manufacturers. 2015-16 and moderate growth forecasts for 2016-17, auto component exports show promising signs. The government has been trying to encourage domestic manufacturing through various policies and incentives, which have helped boost local demand for components. This has led to several companies increasing their focus on local production facilities and sourcing components from within India rather than importing them from abroad. The government is also making efforts to reduce logistics costs through various policy initiatives such as roll-on/roll-off (RoRo) services at ports that will help reduce overall transportation costs.