A NITI Aayog report suggests that India has the potential to become a key player in the global automotive value chain as the world shifts towards electric mobility, autonomous driving, and sustainable production. While India has grown to be the fourth-largest automobile producer globally, its share in the global auto component market remains relatively small at 3% ($20 billion), indicating untapped potential.
The report highlights that India’s auto component sector faces structural challenges that hinder its competitiveness, including supply chain inefficiencies and high material and equipment costs. These challenges contribute to a near-neutral trade balance and a cumulative cost disability of nearly 10% compared to competitors like China.
NITI Aayog emphasizes that addressing these weaknesses is crucial, especially given the opportunities arising from global supply chain disruptions. The report suggests that strategic policy interventions are needed to fully capitalize on India’s potential in the evolving automotive landscape.