India's auto component sector grows 12.7% in FY26, but imports outpace exports: ACMA
New Delhi, July 7
India's auto component industry grew strongly by 12.7 per cent in FY26 with exports growing 5 per cent, however, imports grew faster than exports, widening trade deficit, as per a report by Automotive Component Manufacturers Association of India.
The report noted India's auto component industry grew 12.7 per cent in FY26, driven by a 16.3 per cent rise in supplies to OEMs amid strong vehicle production growth across passenger vehicles, commercial vehicles and two-wheelers.
At the same time, the aftermarket segment expanded 9 per cent, supported by a growing vehicle base and market formalisation. Growth in the aftermarket segment was driven by rising demand for used vehicles, a shift towards larger and more powerful vehicles, and increasing formalisation of the repair and maintenance market, as per the report.
India saw a healthy 5 per cent increase in its exports, while imports rose around 13 per cent, resulting in a trade deficit of USD 1.37 billion. Supplies to the EV segment accounted for 4.6 per cent of OEM sales.
The rise in export was led by higher shipments to Europe amid expectations of a favourable FTA and increased procurement by European OEMs.
Engine components and drive transmission and steering systems accounted for over half of exports. Imports, however, surpassed exports, led by supplies from China, Japan and Germany, with drive transmission and steering and engine components contributing 56 per cent of total imports.
The report highlighted several tailwinds and headwinds for the auto component sector. Key growth drivers include the government's focus on carbon neutrality, expansion of FTAs opening new markets, infrastructure development, rising domestic vehicle demand, stable export prospects, increased investments, capacity expansion and the entry of new players in the mobility space.
However, the sector faces challenges from geopolitical uncertainties, including the Russia-Ukraine conflict, West Asia tensions, US tariffs and Chinese trade restrictions. Other headwinds include limited availability of rare earth magnets, raw material price volatility, higher insurance and freight costs, and labour shortages, it said.
— ANI
Reader Comments
Good to see the aftermarket segment growing 9% – that's where the real India drives, with used cars and local mechanics keeping things running. But the import dependency on China is worrying. We have so much talent in engineering, yet we can't make basic steering systems at competitive costs. Need better quality local suppliers and less red tape. 🙏
The growth is driven by rising vehicle demand, which is good for the economy and jobs. But the headwinds mentioned are real – raw material volatility and labour shortages are hitting small suppliers hard. Also, the EV segment contribution is just 4.6%, which is still tiny despite all the noise. Hybrids and flex-fuel might be a more realistic path for now. 😌
I work in the auto supply chain and this data aligns with what we see on the ground. Export growth is promising, especially to Europe, but the import figure is a concern because it's driven by high-value components. Without an FTA with the EU, our exports will struggle to compete. The ACMA report is honest about the challenges – more industry-government collaboration needed. 🤝
The trade deficit widening is not a good sign. We pride ourselves on 'Make in India' but when it comes to critical components like transmission systems, we still rely heavily on imports. The government should consider reducing import duties on raw materials needed by domestic manufacturers while imposing higher tariffs on finished components from China. Abki baar, self-reliant auto sector! 💪
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