The report also noted that India’s automotive manufacturing sector faces a disability of around 10 per cent compared to China on account of higher raw material costs, steeper import duties and increased freight costs.
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Bloomberg
The auto components sector needs strong policy support to overcome structural challenges and foster innovation, according to a report released by Niti Aayog on Friday.
Achieving these objectives will require a strategic blend of investments, enhanced global competitiveness, and measures to improve the ease of doing business, stated the report titled ‘Automotive Industry: Powering India’s participation in Global Value Chains’.
The report also noted that India’s automotive manufacturing sector faces a disability of around 10 per cent compared to China on account of higher raw material costs, steeper import duties, and increased freight costs.
“Moreover, India’s depreciation rates are twice that of China, at 100 per cent versus 50 per cent, and the prime lending rate is substantially higher, with China’s rate at 3.45 per cent compared to India’s marginal cost of funds-based lending rate (MCLR) of 9.37 per cent. These cumulative disadvantages underscore the need for targeted support to enhance the competitiveness of India’s automotive industry,” it said.
The report also highlighted that India’s auto component sector is poised for substantial growth by 2030, with plans to increase production from $70 billion in fiscal year 2023 (FY23) to $120 billion by FY30.
It has also been envisioned to triple auto component’s exports, growing from $20 billion to $60 billion during this period, positioning itself as a formidable player in global markets.
3 to 4 million jobs by 2030
“Domestic production is projected to rise from $70 billion to $145 billion, driven by increasing demand and a focus on high quality, value-added products. This ambitious growth strategy highlights the sector’s commitment to enhancing its contribution to both the national economy and global supply chains,” the report stated and added that the sector can generate direct employment for 3 to 4 million people by 2030 from around 1.5 million currently.
Realising these targets, however, will require overcoming significant challenges, including improving scale and cost competitiveness, auto component global value chain (GVC) ambition-bolstering R&D capabilities, and upgrading infrastructure, it noted.
“Keeping above aspects in mind, strategic policy interventions will be crucial to supporting industry growth and elevating its global competitiveness,” the report added.
Published on April 11, 2025
