Synopsis

India's auto component industry saw strong growth in FY26, driven by OEM supplies and aftermarket expansion. Exports increased by five percent, while imports rose thirteen percent, widening the trade deficit. Supplies to the electric vehicle segment accounted for a notable portion of OEM sales. Geopolitical uncertainties and raw material price volatility present challenges to the sector. Government initiatives and infrastructure development offer significant growth opportunities for the industry.

New Delhi: India's auto component industry grew strongly by 12.7 per cent in FY26 with exports growing 5 per cent, however, imports grew faster than exports, widening trade deficit, as per a report by Automotive Component Manufacturers Association of India.

The report noted India's auto component industry grew 12.7 per cent in FY26, driven by a 16.3 per cent rise in supplies to OEMs amid strong vehicle production growth across passenger vehicles, commercial vehicles and two-wheelers.

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At the same time, the aftermarket segment expanded 9 per cent, supported by a growing vehicle base and market formalisation. Growth in the aftermarket segment was driven by rising demand for used vehicles, a shift towards larger and more powerful vehicles, and increasing formalisation of the repair and maintenance market, as per the report.

India saw a healthy 5 per cent increase in its exports, while imports rose around 13 per cent, resulting in a trade deficit of USD 1.37 billion. Supplies to the EV segment accounted for 4.6 per cent of OEM sales.

The rise in export was led by higher shipments to Europe amid expectations of a favourable FTA and increased procurement by European OEMs.

Engine components and drive transmission and steering systems accounted for over half of exports. Imports, however, surpassed exports, led by supplies from China, Japan and Germany, with drive transmission and steering and engine components contributing 56 per cent of total imports.

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The report highlighted several tailwinds and headwinds for the auto component sector. Key growth drivers include the government's focus on carbon neutrality, expansion of FTAs opening new markets, infrastructure development, rising domestic vehicle demand, stable export prospects, increased investments, capacity expansion and the entry of new players in the mobility space.

However, the sector faces challenges from geopolitical uncertainties, including the Russia-Ukraine conflict, West Asia tensions, US tariffs and Chinese trade restrictions. Other headwinds include limited availability of rare earth magnets, raw material price volatility, higher insurance and freight costs, and labour shortages, it said.