New Delhi: India’s auto parts industry could enter a strong growth phase over the next few years, helped by electric vehicles (EVs), exports and expansion into high-tech areas such as semiconductors, defence, aerospace and data centres.
According to the Goldman Sachs assessment, the revenue of India’s precision machining and auto-component sector to grow at around 10% compound annual growth rate (CAGR) between FY26 and FY30. The report also expects earnings growth to be faster than revenue growth.
The outlook comes as the Indian government is also pushing local production of advanced automotive products. Official data shows that the PLI scheme for automobiles and auto components had attracted ₹44,326 crore of investment by March 31, 2026.
Details of India Auto Parts Industry Growth Outlook
According to the report, Indian precision machining and auto-component companies are moving beyond their traditional vehicle-parts business.
Goldman Sachs expects sector revenue to grow at a 10% CAGR from FY26E to FY30E. Its estimates indicate revenue growth of about 7% in FY27E, 12% in FY28E and 10% in FY29E.
The report expects EBITDA to grow at around 15% CAGR over the FY26-FY30 period. EBITDA is a commonly used measure of a company’s operating earnings before interest, taxes, depreciation and amortisation.
This suggests that the opportunity is not only about selling more auto components. Companies that improve their product mix and enter higher-value businesses could potentially grow earnings faster than revenue.
Why Could the Indian Auto Components Sector Grow?
One major reason is diversification. Indian component manufacturers are increasingly looking beyond traditional petrol and diesel vehicle parts. Areas such as EVs, defence, aerospace, consumer electronics, semiconductors and data-centre equipment could create new sources of business. This is important because dependence on only one industry can expose manufacturers to sharp demand cycles.
A wider mix of customers and industries can potentially create more stable revenue opportunities, although actual growth will depend on execution and demand.
India Auto Parts Industry Growth Outlook: EV Manufacturing is Becoming an Important Growth Driver
Electric vehicles are changing what goes inside a vehicle. As EV adoption expands, demand can shift towards advanced electronics, electric powertrain parts, battery-related systems and other high-value automotive technologies.
The government’s PLI-Auto Scheme supports domestic manufacturing of Advanced Automotive Technology products and focuses particularly on zero-emission technologies such as battery electric and hydrogen fuel-cell vehicles.
The scheme has a total budgetary outlay of ₹25,938 crore. By March 31, 2026, it had generated:
- ₹44,326 crore in cumulative investment
- ₹52,414 crore in incremental sales
- 67,820 jobs
- ₹2,386.36 crore in incentives disbursed
The government also said that, as of July 16, 2026, 18 applicants had received Domestic Value Addition certificates covering 154 products and variants.
These numbers provide official evidence that investment in advanced automotive manufacturing is already taking place.
India Auto Parts Industry Growth Outlook: Semiconductor Push Could Create Another Opportunity
Semiconductors are becoming increasingly important in modern vehicles. Cars now depend on chips for functions ranging from power management and safety systems to infotainment, connectivity and advanced electronic controls. India is simultaneously expanding its domestic semiconductor ecosystem.
As of June 2026, the government had approved 12 semiconductor manufacturing projects with an investment pipeline of around ₹1.64 lakh crore. These included fabrication, compound-semiconductor and packaging facilities.
On July 15, the Union Cabinet also approved Semicon 2.0 with an outlay of ₹1,27,500 crore, aimed at further strengthening semiconductor design and manufacturing in India.
For precision-engineering and auto-component companies capable of meeting semiconductor-industry requirements, this expanding ecosystem could provide another route for diversification.
Defence and Aerospace Could Become Major New Markets
Defence is another sector where precision manufacturing companies may find opportunities.
India recorded defence production of ₹1.78 lakh crore in FY2025-26, an increase of 15.6% from ₹1.54 lakh crore in the previous financial year. The private sector accounted for around 24% of total defence production, reaching roughly ₹42,000 crore. Defence exports also reached an all-time high of ₹38,424 crore in FY2025-26, up 62.66% from ₹23,622 crore in the previous year.
These trends matter for companies with capabilities in precision machining, forging, casting and other advanced manufacturing processes.
Such capabilities can sometimes be adapted for aerospace and defence applications, giving auto-component manufacturers access to markets outside conventional automobiles.
India Auto Parts Industry Growth Outlook: What are the Risks
The 10% CAGR figure is a forecast, not a guaranteed outcome. A global economic slowdown, weak vehicle demand, changes in EV adoption, raw-material costs, export disruptions or delays in new manufacturing projects could affect actual growth.
Diversification into defence, aerospace and semiconductors also requires significant investment and technical capability. Therefore, the performance of individual companies could differ sharply even if the overall industry grows.
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