Mumbai, August 2026 : India’s auto ancillary industry is expected to maintain its growth momentum in the coming financial year, with the sector projected to expand by around 8–9 per cent in FY27, according to a report by CareEdge Ratings.
The report estimates that the overall market size of India’s auto component industry will increase from approximately Rs 9,835 billion in FY26 to Rs 10,681 billion in FY27, taking the sector’s value to nearly Rs 10.68 lakh crore.
The projected growth is expected to be supported by robust demand from original equipment manufacturers (OEMs), rising component content in vehicles, steady replacement demand, increasing localisation and expanding opportunities in global automotive supply chains.
“India's auto component industry has emerged as an increasingly important part of the global automotive supply chain, supported by its manufacturing competitiveness, engineering capabilities, and expanding domestic market,” said Ranjan Sharma, Senior Director, CareEdge Ratings.
He noted that continued localisation of critical components and investment in advanced manufacturing capabilities would be important for increasing value addition and strengthening India’s long-term position in the global automotive ecosystem.
Investment-Led Expansion
According to the report, the domestic auto ancillary industry is entering a sustained investment-led growth phase. Expanding vehicle production and greater value addition across the automotive supply chain are expected to create new opportunities for component manufacturers.
The shift towards cleaner and increasingly electronics-intensive vehicles is also expanding the addressable market for suppliers. At the same time, government-backed localisation efforts are encouraging manufacturers to develop domestic capabilities and reduce dependence on imported components.
India’s total vehicle production has risen significantly, increasing from around 23 million units in FY22 to 34.7 million units in FY26. The growth has been broad-based across different vehicle categories.
Domestic OEMs remained the largest source of revenue for component manufacturers, accounting for approximately 67 per cent of industry revenues in FY26. Exports contributed around 22 per cent, while the replacement or aftermarket segment accounted for about 11 per cent.
Premium Vehicles and Safety Norms Boost Demand
The increasing preference for SUVs and premium vehicles is another factor supporting the industry. Higher-value vehicles generally require greater component content, while increasingly stringent safety and emission regulations are pushing manufacturers towards more sophisticated systems.
India’s growing integration with international automotive supply chains is also expected to strengthen export opportunities. Auto component exports are projected to reach approximately Rs 2.3 trillion in FY27, reflecting the increasing competitiveness of Indian manufacturers.
EV Transition Creates New Opportunities
The rapid expansion of electric mobility is emerging as another major growth driver. According to CareEdge Ratings, electric vehicle registrations in India increased from around 1.7 lakh in FY20 to 24.5 lakh in FY26.
Over the same period, EV penetration rose from approximately 0.71 per cent to 8.28 per cent, highlighting the pace of transformation taking place across the country's automotive sector.
Arti Roy, Associate Director, CareEdge Ratings, said the transition towards cleaner and electronics-intensive mobility platforms was opening new opportunities for manufacturers involved in EV components, advanced electronics, powertrain technologies and other high-value automotive systems.
The combination of rising domestic demand, increasing exports, localisation, premiumisation and the transition to electric and technologically advanced vehicles is therefore expected to keep India’s auto component industry on a strong growth trajectory in FY27.
(The content of this article is sourced from a news agency and has not been edited by the Mavericknews30 team.)
