In a bid to bolster India’s position in the global automotive market, NITI Aayog has recommended a slew of fiscal and non-fiscal measures aimed at strengthening the country’s auto components manufacturing sector. The suggestions were part of a report titled “Automotive Industry: Powering India’s Participation in Global Value Chains”, released on Friday by NITI Aayog Vice Chairman Suman Bery.
The report envisions India’s automotive component output reaching USD 145 billion by 2030, with exports surging from the current USD 20 billion to USD 60 billion. To achieve this, the think tank advocates for government-provided operational expenditure (Opex) support alongside capital expenditure (Capex) incentives for tooling, infrastructure, and dye manufacturing.
A key recommendation includes the development of brownfield large-scale auto clusters equipped with shared facilities like R&D centers and testing labs. These clusters aim to encourage firm-level collaboration and enhance supply chain resilience. The report also stresses the need for skill development initiatives to build a strong talent pool and incentives for research, development, and international branding, especially to empower MSMEs via intellectual property transfers.
On the non-fiscal front, the report calls for streamlining regulatory processes, introducing greater labor flexibility, and improving supplier networks. It also emphasizes the importance of joint ventures, foreign partnerships, and free trade agreements to widen India’s global footprint.
Despite being the world’s fourth-largest vehicle producer with nearly 6 million units annually, India holds only a modest 3% share in the USD 700 billion global auto components export market. Most global trade is dominated by high-precision segments like engine and transmission systems, where India’s participation is limited to 2-4%.
Addressing structural challenges such as high operational costs, infrastructural deficits, and low R&D investment is essential for enhancing India’s integration into global value chains, the report concludes.
