Snapshot

Leading Global Automotive Manufacturing Hub.

Indian Auto Component Industry clocks highest-ever turnover of $69.7 Bn, grows 33% in FY 2022-23.

The growing presence of global automobile Original Equipment Manufacturers (OEMs) in the Indian auto components industry has significantly increased the localization of their components in the country.

The FDI inflow into Indian automotive industry during the period Apr 2000 to Dec 2023 stood at $35.65 Bn.

100% FDI in the automotive parts industry is allowed under the automatic route.

For further details, please refer FDI Policy

 




 

  • %

    Share in India's GDP

  • $ Bn

    Size of Indian Original Equipments Manufacturers ( OEMs)

  • $ Bn

    Auto Component exports

The rapidly growing auto market in India is expected to reach $300 Bn by 2026.

Automotive aftermarket segment in India is expected to reach $32 Bn by 2026.

Auto Components industry exports to grow 5X in next 10 years.

Industry Scenario

The Auto Components industry in India is expected to grow to $200 Bn by 2026.

The auto component industry sized-up to INR 5.60 Lakh Cr registering a 32.8% growth, thus outpacing its highest ever turnover of INR 4.20 Lakh Cr in FY 2021-22.

India is set to manufacture 5 Lakh EV three wheelers, at least 55,000 EV four wheelers and 7000 EV buses by 2024.

The aftermarket turnover in FY 2022-23 of the Auto Components industry stood at $10.6 Bn as compared to $10 Bn in the previous year.

Auto Component sales to OEMs, in the domestic market, grew to $59.3 Bn which is a growth of 39.5% over the previous year.

With a 20.1% contribution to the manufacturing GDP, the automotive sector is a top driver of macroeconomic growth and technological development in the country (UNIDO IAP, 2023).

GROWTH DRIVERS

  • Expanding R&D hub

    8% of the country’s R&D expenditure is in the automotive sector

  • Emerging global sourcing hub

    Proximity to markets such as ASEAN, Europe, Japan and Korea

  • Cost competitive

    Excise duty reduction in vehicles will spur demand

  • Double its Auto Industry Size

    India aims to double its auto industry size to INR 15 Lakh Cr by end of year 2024

  • Favorable trade policy

    100% FDI allowed and no restrictions on import-export

  • Atmanirbhar Bharat

    PLI schemes in automobile and auto component sector with financial outlay of INR 25,938 Cr introduced under Atmanirbhar Bharat 3.0

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Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi announced the Production-Linked Incentive (PLI) Scheme in the Automobile and Auto Components sectors. The PLI scheme (outlay of $3.5 Bn) for the automobile sector proposes financial incentives of up to 18% to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain. Incentives are applicable for determined sales of products manufactured in India from April 1, 2022, for a period of five consecutive years. The Ministry of Heavy Industries has announced the extension of the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year with partial amendments. Under the amended scheme, the incentive will be applicable for a total of five consecutive financial years, starting from the financial year 2023-24. The disbursement of the incentive will take place in the following financial year 2024-25. The scheme also specifies that an approved applicant will be eligible for benefits for five consecutive financial years, but not beyond the financial year ending on March 31, 2028. Recent Developments: 1) Total of 115 companies had filed their application under this scheme. Out of which 85 applicants have been approved under this PLI scheme - 18 applicants for Champion OEM Incentive scheme and 67 applicants have been approved under Component Champion Incentive scheme. 2) The scheme has been successful in attracting proposed investment of INR 67,690 Cr against the target estimate of investment INR 42,500 Cr over a period of five years. 3) Apart from Indian business groups, approved applicants for Champion OEM Incentive scheme include groups from countries such as Republic of Korea, USA, Japan, France, Italy, UK and Netherlands.

  • INR 25,938 Cr

    Scheme Outlay

Industrial Land Bank Portal

GIS - based map displaying available infrastructure for setting up business operations in the state.

Investible Projects

Investment Opportunities in Auto Components

    Major Investors

    Data On Map

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    FAQs

    Frequently
    Asked Questions

    Whether expenditure related to Transfer of Technology (ToT) Agreements including the purchase of technology are covered as eligible investment under the scheme?

    As per question 47 of the FAQs dated 8th October, 2021, the capital expenditure on Engineering Research & Development (ER&D) and product design & development is allowed under the scheme. It is further clarified that the Capital expenditure on ER&D and product design & development related to the eligible products shall be allowed for the purpose of Investment under the Scheme. The term “related” here refers to all stages in the entire value chain of the goods proposed to be manufactured including software integral to the functioning of the same. Such expenditure shall include expenditure on in-house and captive ER&D, directly attributable to eligible products, including all stages in the entire value chain of the goods proposed to be manufactured including software integral to the functioning of the same. Such expenditure shall include test and measuring instruments, prototypes used for testing, purchase of design tools, software cost (directly used for ER&D) & license fees, expenditure on technology & transfer of technology (ToT) Agreements including the purchase of technology, IPR, Patents and copyrights for ER&D, subject to all relevant documents for same being submitted to MHI/ PMA.

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    Will the Testing Agency of MHI follow approval procedure after the applicant approval from MHI or at the time of pre-approval stage?

    Approved applicant (i.e. post receipt of Approval letter under the Scheme) shall apply for registration/ approval of their products as approved eligible Advanced Automotive Technology (AAT) products with Testing Agency of MHI on an ongoing basis.

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    Whether expenditure on royalty is covered as eligible investment under the scheme?

    No. The expenditure on royalty is not covered under the scheme.

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    Is there any restriction on selection of AAT products by the approved applicants under the Scheme?

    An approved applicant under Champion OEM scheme will have option to seek incentive for any number of permissible AAT Vehicle products. Similarly, an approved applicant under Component Champion scheme will have option to seek incentive for any number of permissible AAT Component products. It may, however, be noted that Total Incentive per entire Group company(ies) is capped at ₹ 6,485crore (25% of total incentives outlay under this Scheme).

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    Can the revenue/ investment/ net worth of individual promoters of the companies/ group companies be considered under Global group revenue/ Global Investment/ Global net worth, respectively, for eligibility under the Scheme?

    No. Revenue/ investment/ net worth of individual promoters will not be considered under Global group revenue/ Global Investment/ Global net worth, respectively, for eligibility under the Scheme because the scheme recognises company/ group company(ies), not individual promoters.

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