Auto components industry expected to grow 8-10% in FY27: ACMA

New Delhi: The Indian automotive components sector is expected to grow around 8-10 per cent in the current fiscal, driven by domestic demand and robust exports despite geopolitical headwinds, industry body ACMA said on Tuesday.

The industry recorded a turnover of Rs 7.60 lakh crore (USD 85.9 billion), registering a growth of 12.7 per cent in rupee terms over the previous fiscal, Automotive Component Manufacturers Association of India (ACMA) said. ​

For the first time in two years, there was a trade deficit as exports from the country were less than imports of auto components, especially electronics parts and parts for electric vehicles, with China accounting for the largest share at 36 per cent of the total imports. ​


The industry also witnessed labour shortages, specifically in small and medium enterprises, in the wake of the West Asia war that led to workers moving to their native places as the cost of living in towns and cities increased due to the rise in energy costs. ​

"The medium- to long-term outlook for the Indian auto component industry remains positive," ACMA President Vikrampati Singhania told reporters here.

Growing domestic demand, infrastructure-led economic growth, expanding manufacturing investments, deeper global integration through Free Trade Agreements and increasing global sourcing from India are creating significant opportunities for the sector, said Singhania, who is also Vice Chairman & MD of JK Fenner (India). ​

When asked about the growth outlook for FY27, ACMA Director General Vinnie Mehta said, "The first quarter has been a very strong quarter. If we continue to grow as is, there should be no reason why we shouldn't be able to maintain the growth rate that we have. We can expect 8 to 10 per cent growth for the year."

"Geopolitical challenges such as the West Asia crisis, the tariff situation in the US, the largest export market for the industry, and Chinese trade restrictions are some of the headwinds the industry faces going forward," he added. ​

On the other hand, the government's focus on carbon neutrality, multiple FTAs, and growing global confidence in Indian manufacturing, increasing domestic demand, infrastructure development, capacity expansion by OEMs and new entrants in the mobility space are tailwinds for the component industry, Mehta noted.

​The industry body said FY26 performance was driven by robust domestic demand, higher vehicle production, sustained investments in capacity and technology and steady export growth despite an increasingly uncertain global environment.

Over the last five years, the industry has more than doubled in size, expanding at a CAGR of 17 per cent, reaffirming India's emergence as a globally competitive automotive manufacturing base, it added.

ACMA said the auto components industry remains well positioned to strengthen India's role as a preferred global automotive manufacturing and sourcing hub.

In the last fiscal, exports rose 5 per cent to USD 24 billion (Rs 2,12,176 crore).

Europe recorded the strongest growth, while engine components and drive transmission & steering continued to account for over half of exports, ACMA said. ​

On the other hand, imports grew 13 per cent to USD 25.4 billion (Rs 2,24,287 crore), driven by higher demand for advanced technologies and specialised components. China, Japan and Germany remained the leading sourcing markets, it added.

Commenting on the trade deficit, Mehta said,"This time around we had a modicum of a trade deficit from the earlier past two years, where we had a trade surplus."

Steady growth in the EV segment, where localisation is not high, along with imports of electronics parts, was primarily responsible for the rise in overall imports, he added.

Electric vehicle component supplies accounted for 4.6 per cent of domestic OEM supplies, excluding lithium-ion batteries.

Mehta also noted that the components industry also faced labour shortage issues after the West Asia crisis broke out, as "the cost of living in towns and cities has gone up very heavily because the energy cost went up", and many of the companies had even given the labourers induction cookers and stoves to retain them.

There was, however, no impact on production and "there has been no let up in terms of production", he noted.