Indian auto ancillary industry to grow by 8-9 pc in FY27, touch Rs 10.6 lakh crore
Mumbai, Aug 13
The Indian auto ancillary industry is projected to grow by around 8-9 per cent in FY27, with its market size increasing from around Rs 9,835 billion in FY26 to Rs 10,681 billion in FY27, a new report showed on Thursday.
This is supported by healthy original equipment manufacturer (OEM) demand across major segments, increasing component content per vehicle, resilient replacement demand, higher localisation, and expanding global sourcing opportunities, according to the report by CareEdge Ratings.
"India's auto component industry has emerged as an increasingly important part of the global automotive supply chain, supported by its manufacturing competitiveness, engineering capabilities, and expanding domestic market," said Ranjan Sharma, Senior Director, CareEdge Ratings.
Continued progress in localisation of critical components and development of advanced manufacturing capabilities will be key to enhancing value addition and strengthening India's long-term position in the global automotive ecosystem, he mentioned.
The domestic auto ancillary industry is entering a sustained investment-led growth phase, supported by expanding domestic vehicle production and increasing value addition across the automotive supply chain.
The transition towards electronics-intensive and cleaner mobility platforms is expanding the addressable market for component manufacturers, while localisation initiatives are creating opportunities across segments to reduce import dependence, said the report.
Total vehicle production increased from around 23 million units in FY22 to 34.7 million units in FY26, reflecting broad-based growth across vehicle segments.
Domestic OEMs remained the primary revenue driver, accounting for around 67 per cent of industry revenues in FY26, while exports and the aftermarket contributed around 22 per cent and 11 per cent, respectively.
In addition, the growing preference for SUVs and premium vehicles, coupled with stricter safety and emission norms, is increasing component content per vehicle and supporting demand for higher-value systems.
India's growing integration into global automotive supply chains is expected to further support industry growth, with exports projected to rise to approximately Rs 2.3 trillion in FY27.
EV adoption in India has accelerated significantly, with overall vehicle registrations increasing from around 1.7 lakh vehicles in FY20 to 24.5 lakh vehicles in FY26, resulting in EV penetration rising from 0.71 per cent to around 8.28 per cent over the same period.
"The industry's ongoing transition towards electronics-intensive and cleaner mobility platforms is creating new opportunities across EV-linked components, advanced electronics, powertrain technologies, and other high-value automotive systems," said Arti Roy, Associate Director, CareEdge Ratings.
— IANS
Reader Comments
Indian auto components are becoming a reliable source for global OEMs. The focus on electronics and clean mobility aligns with worldwide trends. It'll be interesting to see how this impacts the global supply chain dynamics in the coming years.
Finally some positive economic news! The EV adoption numbers are particularly encouraging - from just 1.7 lakh vehicles in FY20 to 24.5 lakh in FY26 is a massive jump. But we need to ensure this growth is sustainable and creates quality jobs for our youth. The government should focus on skilling programs in the auto sector.
The numbers are impressive but let's not get carried away. An 8-9% growth is decent, but we need to see if these projections hold up against global economic headwinds. The US and European markets are facing challenges, which could impact export growth. That said, India's domestic demand provides a strong cushion.
The emphasis on cleaner mobility and localisation is spot on! As a consumer, I'm seeing more affordable EVs and better local parts in my new car. This is a win-win - we reduce pollution and boost our economy. Let's hope this growth also leads to better salaries for workers in the industry. 🙏
Interesting to see India's OEM demand driving 67% of the industry revenue. With SUVs and premium vehicles gaining popularity, the component content per vehicle is likely to keep increasing. This is a solid structural growth story, not just a cyclical uptick.
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