India has potential to be key player in automotive global supply chain: NITI Aayog report

NITI Aayog report highlights India's potential in automotive sector, emphasizing growth, challenges, and strategies for global competitiveness.

As the world transitions toward electric mobility, Autonomous Driving , Advanced Driver Assistance Systems (ADAS), the Internet of Things (IoT), and sustainable production, the Indian automotive sector can emerge as a key player in the global value chain (GVC), according to a report by NITI Aayog. 

While the local automotive industry, having made significant strides to position India as the world’s fourth-largest automobile producer after China, the US and Japan, its share in the global traded auto component market remains modest at just 3% ($20 billion), reflecting untapped potential and underlying challenges, the report laments. 

“With a near-neutral trade balance and a cumulative cost disability of nearly 10% compared to competitors like China, India’s auto component sector faces structural hurdles that impede its competitiveness,” as per the report. 

“These include supply chain inefficiencies, high material and equipment costs, and limited penetration in high-precision segments like engine and transmission systems,” according to it.

Envisioning a bold future for India’s automotive component production, the report forecasts that it may reach the size of $145 billion by 2030, with auto component exports tripling to $60 billion, yielding a trade surplus of $25 billion. 

Such growth promises to create 2 to 2.5 million additional direct jobs, bolster ancillary industries, and elevate India’s GVC share to 8%, it emphasized. 

In a message for the report, NITI Aayog Vice Chairman Suman K. Beri said, “The COVID-19 pandemic revealed supply chain weaknesses, while recent geopolitical uncertainties and resulting disruptions have driven manufacturers to seek more reliable and cost-effective production hubs.”