NEW DELHI: India’s automotive industry is the cornerstone of the nation’s manufacturing and economic growth, contributing 7.1 per cent to India’s Gross Domestic Product (GDP) and 49 per cent to manufacturing GDP, according to a NITI Aayog a report, titled ‘Automotive Industry: Powering India’s Participation in Global Value Chains”.
The report was released last week by NITI Aayog Vice Chairman Suman Bery and senior members of the premier policy think tank of the government.
The report outlines India’s Global Value Chain (GVC) potential in the automotive sector and highlights strategic pathways for global leadership.
India’s automotive industry is a cornerstone of the nation’s manufacturing and economic growth, contributing 7.1 per cent to India’s Gross Domestic Product (GDP) and 49 per cent to manufacturing GDP.
As the fourth largest automobile producer globally, India possesses the scale and strategic depth to emerge as a global leader in the automotive value chain. The sector spans a vast ecosystem, from vehicle assembly and auto component manufacturing to deep interlinkages with critical industries such as steel, electronics, rubber, IT, and logistics.
In recent years, India has seen exponential growth in vehicle production, with over 28 million units manufactured in 2023–24 alone. The industry’s contribution goes beyond industrial output, and it supports millions of direct and indirect jobs, spurs innovation, and is central to India’s green mobility transition, industrial ambitions, and trade strategy.
The global automotive component market was valued at USD 2 trillion in 2022, with USD 700 billion traded across borders. Despite India’s strong manufacturing base, its share in the globally traded auto component market remains at just 3 per cent (~USD 20 billion), highlighting a vast scope for expansion.
India’s trade ratio in auto components is near-neutral (~0.99), with exports and imports nearly balancing each other. This also underlines the domestic sector’s limited penetration in high-value, high-precision segments such as engine and engine components, along with drive transmission and steering systems, where India holds just 2–4 per cent of the global trade share.
Bridging this gap requires structural reforms, strategic investments, and a coordinated industrial policy approach. With the right enabling conditions, India can triple exports to USD 60 billion, generate a USD 25 billion trade surplus, and create over 2-2.5 million direct jobs by 2030, propelling it toward becoming a globally competitive, innovation-driven manufacturing hub.
Agencies