India’s major auto component manufacturers are expected to invest ₹25,000-₹30,000 crore in the next fiscal year to expand capacity, localize production, and develop EV components, according to ICRA. The investments will also focus on regulatory compliance and technological advancements in the sector.
Strong Investment Pipeline for FY2026
ICRA’s assessment, based on discussions with large auto component suppliers, indicates that the industry is set to spend ₹15,000-₹20,000 crore in FY2025 and an even larger ₹25,000-₹30,000 crore in FY2026.
Vinutaa S, Vice President and Sector Head at ICRA, noted that incremental investments will focus on new products, development of advanced technology, EV components, and regulatory compliance requirements.
Revenue Growth Expected to Moderate
Despite the substantial investment pipeline, ICRA projects a moderation in revenue growth for the Indian auto component industry.
- Revenue growth is expected to ease to 7-9% in FY2025 and 8-10% in FY2026, compared to the 14% growth in FY2024.
- Domestic OEM demand, which accounts for over half of the industry’s revenue, is estimated to grow at 7-9% in FY2025 and 8-10% in FY2026.
- The replacement market is expected to grow at 5-7% in FY2025 and 7-9% in FY2026, driven by a higher average vehicle age, growth in the used car segment, and preventive maintenance practices.
Also read: Volvo to Invest ₹1,400 Cr in Karnataka for Expansion
Exports Facing Challenges, But Long-Term Prospects Remain Strong
Exports, which contribute 30% of the industry’s revenue, are expected to be impacted due to weak vehicle registration growth in key global markets. However, factors such as diversification of vendors by global OEMs and increased outsourcing to India could support long-term growth.
“The rising adoption of premium components, advanced electronics, and localized EV parts will further boost revenue opportunities for Indian suppliers,” said Vinutaa.
With growing investment in EVs, premium components, and compliance-driven innovations, the Indian auto component sector is gearing up for strong expansion and evolving global positioning in the years ahead.
