The Indian auto component industry is setting its sights on achieving $100 billion in exports by strategically focusing on the US and European markets, as per a report by Boston Consulting Group (BCG) and the Auto Component Manufacturers Association of India (ACMA).
The report, titled Revving Up Exports: The Next Phase of Export Growth for the Auto Component Industry, underscores that India can potentially add an additional $40-60 billion in incremental exports by prioritizing 11 product families and strengthening its position in these key international markets.
In the financial year 2024 (FY24), India’s auto component exports reached $21.2 billion, marking a significant turnaround from a $2.5 billion deficit in FY19 to a $300 million surplus.
“We have not only achieved a positive trade balance, but for auto-specific use cases, the surplus is even more pronounced, reaching approximately $0.5-1.5 billion. We are committed to sustaining this growth trajectory and have set an ambitious target of $100 billion in exports ahead,” stated Shraddha Suri Marwah, President of ACMA.
The report highlights that by capitalizing on emerging electric vehicle (EV) and electronic value chains through increased localization, India can unlock an additional $15-20 billion in exports. Key components such as battery management systems, telematics units, instrument clusters, and anti-lock braking systems (ABS) are expected to drive this growth.
With the global auto component trade valued at $1.2 trillion, the US and Europe remain the largest importers. India’s export share in these regions stands at approximately 4.5%, indicating significant potential for expansion.
Global original equipment manufacturers (OEMs) play a crucial role in India’s auto component industry, accounting for 20-30% of exports. The report highlights India’s cost advantage, particularly in the German market, where its components are priced up to 15% lower than those from competing suppliers. Eastern European markets currently exert significant influence over German imports.
In the US market, where imports are dominated by Mexico and China, India is positioned competitively. While Mexico benefits from a 2-5% cost advantage due to reduced logistics and tariff expenses, Chinese components are 20-25% more expensive than Indian alternatives due to additional tariffs.
“As geopolitical dynamics evolve, global OEMs are reassessing their supply chains and manufacturing strategies, presenting India with a prime opportunity to establish itself as a leading destination for global OEMs and Tier 1 suppliers. Encouraging 2-3 global OEMs to set up manufacturing bases in India could serve as a catalyst, enabling domestic auto component players to better integrate into global supply chains and strengthen India’s position in the international market,” remarked Vikram Janakiraman, Managing Director and Senior Partner at BCG.
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