India's Auto Component Exports Set To Hit $70-100 Billion By FY2030: ACMA-McKinsey

Despite uncertainties in the global trade landscape, India's auto component exports are set to reach $70 billion-$100 billion by fiscal year 2030, a new report by Automotive Component Manufacturers Association of India (ACMA) and McKinsey said on Friday. According to ACMA-McKinsey, three key trends position India for substantial long-term export expansion:

Untapped Global Market Potential

India currently grabs less than 5 per cent of global auto component exports, presenting significant opportunities for market expansion and growth.

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Cost-Competitive Manufacturing

India's manufacturing competitiveness stems from multiple factors including cost-effective workforce, local steel production capabilities, substantial domestic market demand providing scale advantages, and strategic geographic positioning as a preferred global supplier.

Dual Technology Export

India's automotive component sector includes both traditional automotive parts and cutting-edge new technologies, positioning the country as an attractive option for global automakers implementing supply chain diversification strategies.

Growth Opportunities For Auto Component Exporters

Multiple ICE (Internal Combustion Engine) component segments face likely shrinkage globally. Suppliers in developed economies could experience reduced economies of scale while confronting dual challenges of decreased production volumes and increased product variety requirements. Therefore, this market shift creates opportunities for Indian small and medium enterprises (SMEs) to capture a $20 billion to $30 billion market opportunity by 2030, leveraging their competitive labour costs.

Competitive Pressure For Indian Manufacturers

As China redirects its domestic automotive market toward electric vehicles (EVs), the country may redirect ICE production capacity toward export markets, creating competitive pressure for Indian manufacturers. However, the growing adoption of supply chain diversification strategies by global automotive players presents opportunities for India to establish itself as the preferred alternative supplier, contingent upon meeting international quality standards and cost expectations.

Global Electric Vehicle Market Expansion

The increasing focus on electrification and connectivity technologies impacts both domestic and international automotive markets. Global four-wheeler electrification projections for 2030 include 35-50 per cent EV market penetration in the US, 60-85 per cent EV market penetration in Europe and likely EV sales growth at approximately 35 per cent CAGR in India.

Non-Traditional Component Opportunities

As electric mobility adoption accelerates, non-traditional automotive components including batteries and semiconductors now represent 40-50 per cent of electric vehicle composition. Connected car technologies encompassing vehicle diagnostics and telematics systems are fundamentally reshaping the automotive industry landscape.

Component Sourcing From India

Global automakers pursuing supply chain diversification strategies may increasingly source components from India, attracted by the country's demonstrated quality standards, reliability track record and cost competitiveness. Established capabilities in traditional automotive components and significant potential for advanced EV technology development, India's auto component industry is positioned to become a critical participant in global automotive value chains.