India's auto parts industry likely to grow 10 pc through FY30
New Delhi, July 30
India's auto component industry is likely to grow at a compound annual growth rate of about 10 per cent through fiscal 2030 as manufacturers diversify into higher‑margin precision engineering sectors such as semiconductor equipment, defence, aerospace and data‑centre power generation, a new report has said.
The US investment bank Goldman Sachs said in the report that the sector is expected to see revenue rising to $124.4 billion by FY30 from an estimated $85.6 billion in FY26.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) is expected to expand faster, at 15 per cent CAGR over the same period.
The investment bank said many manufacturers are reshaping their product mix and using existing capabilities to maximise profits as India's auto sector enters a "transformation journey".
Global efforts to de‑risk supply chains are drawing semiconductor, automotive and industrial buyers to India creating opportunities for Indian precision-machining companies across semiconductor wafer-fabrication equipment, electric vehicle components, aerospace, defence and data centre power generation.
The brokerage said the current perception of these companies-largely as cyclical auto component manufacturers with limited pricing power and recurring capital expenditure requirements-fails to fully capture their expanding addressable markets.
Growth from FY26-FY30 is expected to be driven by electrification, the upcoming Eighth Pay Commission, exports, the global shift of legacy internal combustion engine (ICE) component manufacturing to India and diversification into defence, consumer durables, electronics, semiconductors and aerospace.
Further, Indian manufacturers are poised to benefit from lower labour costs, competitiveness in legacy ICE products and the relatively slower pace of domestic electrification, the report said.
The brokerage forecasted auto component companies to outperform vehicle manufacturers during the next Pay Commission-led demand cycle.
"Suppliers benefit from higher production volumes across multiple original equipment manufacturers rather than depending on the success of individual vehicle models," it said.
The "others" segment, comprising defence, construction and energy, is expected to expand at a CAGR of 16 per cent between FY26 and FY30, making it the fastest-growing end market among the sectors tracked by the brokerage.
— IANS
Reader Comments
Great to see Indian companies moving up the value chain! The focus on precision engineering for semiconductors and EVs is the right path. But I'm a bit skeptical about the 10% growth projection—global EV demand is still uncertain, and we're heavily reliant on legacy ICE parts for exports. Hope the government supports skilling programmes to match this ambition.
Finally, some good news for the manufacturing sector! 😊 Our auto parts guys have been underappreciated for too long. The shift to higher-margin areas like aerospace and defence is exactly what we need. But let's be honest—infrastructure and logistics costs in India still sting. If we fix that, this 10% CAGR could easily be 15%.
From a US perspective, this is really interesting. India's lower labour costs and engineering pool make it an obvious choice for legacy ICE and EV component sourcing. The defence and semiconductor angles are strategic too. But Goldman Sachs is notorious for being overly optimistic—let's see how the next Pay Commission actually boosts demand. Good for India, but execution is key.
This is a massive opportunity for Indian manufacturers! The report rightly points out that suppliers benefit from multiple OEMs rather than depending on single model success. Our companies should also focus on R&D for EV-specific components, not just ICE. The defence angle is promising—Make in India in action. Hope smaller towns and tier-2 cities see the jobs too. 🚗🔧
The diversification into semiconductor equipment and data centre power generation is a smart hedge.
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