Indias Auto Parts Industry Expected to Grow at 10% CAGR by 2030: Report

New Delhi, July 30: India’s auto components industry is projected to grow at a compound annual growth rate (CAGR) of approximately 10% by the fiscal year 2030. This growth is attributed to manufacturers expanding their operations into high-margin sectors such as semiconductor equipment, defense, aerospace, and data center power generation, according to a recent report.

The report released by U.S. investment bank Goldman Sachs estimates that the revenue of the country’s auto parts industry will reach $124.4 billion by fiscal year 2030, up from $85.6 billion in fiscal year 2026.

During this period, EBITDA is expected to grow at an annual rate of 15%, driven by companies venturing into higher-margin businesses.

As India’s auto sector enters a “transformation phase,” many manufacturers are altering their product mix and leveraging their existing capabilities to boost profits.

Global efforts to mitigate supply chain risks are drawing semiconductor, automotive, and industrial buyers to India. This trend is creating opportunities for Indian precision machining companies in sectors like semiconductor wafer fabrication equipment, electric vehicle components, aerospace, defense, and data center power generation.

The brokerage noted that the current perception of these companies—primarily seen as cyclical auto component manufacturers with limited pricing power and frequent capital expenditure needs—does not fully reflect their expanding market potential.

Growth from fiscal year 2026 to fiscal year 2030 will largely stem from electrification, the upcoming eighth pay commission, exports, the shift of old internal combustion engine (ICE) component manufacturing to India, and expansion in sectors such as defense, consumer durables, electronics, semiconductors, and aerospace.

The report also highlighted that Indian manufacturers are expected to benefit from lower labor costs, competitiveness in older ICE products, and a relatively slow pace of electrification domestically.

The brokerage predicts that during the demand cycle driven by the next pay commission, auto component companies will outperform vehicle manufacturers.

It stated, “Suppliers benefit from higher production volumes for multiple original equipment manufacturers (OEMs) rather than relying on the success of a single vehicle model.”