India Positioned to Drive Innovation in Global Automotive Supply Chain: Report

By Admin

14 Apr, 2025

India is poised to take center stage in the global automotive supply chain, leveraging its industrial capabilities and evolving technological ecosystem. According to a recent report by NITI Aayog, India has the potential to become a pivotal player in the global value chain (GVC), especially as the world moves towards electric mobility, autonomous driving, Advanced Driver Assistance Systems (ADAS), the Internet of Things (IoT), and sustainable production practices.

A Sector with Untapped Potential

Despite being the world’s fourth-largest automobile producer—behind only China, the US, and Japan—India’s share in the globally traded auto component market stands at a modest 3%, or approximately $20 billion. This figure reflects significant untapped potential and highlights the structural challenges that continue to constrain the industry’s competitiveness.

As per the report, India’s auto component sector operates with a near-neutral trade balance but suffers from a cumulative cost disadvantage of nearly 10% compared to major competitors like China. These structural hurdles stem from supply chain inefficiencies, high material and equipment costs, and limited presence in high-precision manufacturing segments such as engine and transmission systems.

Towards a Bold Vision

The report envisions a transformative future for India’s automotive component industry. By 2030, the sector could grow to $145 billion, with exports projected to triple to $60 billion—yielding a trade surplus of $25 billion. Such growth would not only expand India’s share in the GVC to 8% but also generate 2 to 2.5 million additional direct jobs and stimulate ancillary industries.

Technology Integration and Industry 4.0

One of the most significant shifts in global manufacturing is the deepening integration between the automotive sector and advanced fields such as electronics, semiconductors, and artificial intelligence. With technological evolution accelerating, the cost of semiconductor chips per vehicle is expected to double, rising from $600 to $1,200 by 2030. This trend amplifies the need for Indian manufacturers to align with Industry 4.0 and integrate next-generation capabilities such as ADAS and EV platforms.

The global automotive component market was valued at approximately $2 trillion in 2022, with around 30% ($700 billion) constituting the traded component market. India’s current stake reveals a massive opportunity for expansion through innovation and investment.

Strategic Interventions for Growth

To realize its potential, the report emphasizes that India must overcome its cost disadvantages and modernize its infrastructure. NITI Aayog proposes a set of fiscal and non-fiscal measures, including:

• Operational support for high-potential components.
  
  

• Capital expenditure assistance for tools and dies.
  
  

• Cluster development to strengthen domestic supply chains.
  
  

• Enhanced R&D initiatives and
  
  

• Skill development programs to build a future-ready workforce.
  
  

India: A Trusted Global Manufacturing Partner

NITI Aayog Vice Chairman Suman K. Beri emphasized the changing global landscape, noting that the COVID-19 pandemic exposed weaknesses in global supply chains. Ongoing geopolitical disruptions have only heightened the need for reliable, cost-effective manufacturing hubs.

“In this context, India offers a unique opportunity to emerge as a trusted global manufacturing partner. With its expanding production capabilities, competitive costs, skilled workforce, and growing technological expertise, India is well-positioned to play a larger role in the global automotive supply chain,” said Beri.

Conclusion

As the global automotive industry evolves, India stands at a crucial juncture. With bold reforms, investment in advanced technologies, and strategic support from policymakers, India can unlock its full potential and drive the next wave of innovation in the global automotive supply chain.