India’s Booming Auto-Parts Manufacturing Market
India’s Booming Auto-Parts Manufacturing Market

Sep 21, 2021

Over the last few years, India’s auto-parts industry has experienced significant growth. This industry accounts for 2.3% of India’s GDP and employs as many as 1.5M people. In 2017, the total value of India’s auto-part exports stood at $10.9B as compared to $10.8B the previous year. Since 2016, India’s total automotive industry has expanded by 14.3% due to an uptick in aftermarket sales, reaching a level of $43.55B. This sector will grow to $47-49B by the end of 2018, as India’s auto-parts exports are expected to increase by 7-9%, thanks to increased exports to emerging nations and stronger worldwide growth. [1]

Stability Spurs India’s Global Demand

While a climate of uncertainty swirls around U.S. trade relations with certain countries, India remains a proactive global manufacturing hub, with favorable advantages in design, manufacturing, exports, and intellectual property protection for global OEMs. Combined with India’s relative political and economic stability, the added incentives created by Goods and Services Tax (GST) and the Make in India program mentioned below are expected to spur a dramatic increase in the nation’s share of the global auto-parts manufacturing market.

Goods & Services Tax: A recent overhaul of India’s commercial tax system has made it an even more attractive source for auto-parts manufacturing and exports. India’s new nationwide GST program was launched in 2017. It represents a uniform, transparent tax code for all Indian businesses, replacing a convoluted regional tax structure, where 29 states independently levied their own complicated schedules of surcharges, excise tariffs, and other taxes. GST mitigates the economic burden of multiple cascading local taxes compounded on a single product.

Make in India Program: This initiative was established in 2014 to enhance the country’s reputation as a world-class manufacturing center. In 2016, the government announced ambitious new incentives and policies to promote investment, foster innovation, and protect intellectual property, all directed toward sustaining a highly efficient, world-class manufacturing infrastructure. This included new de-licensing and deregulation measures to eliminate red tape and other bureaucratic roadblocks to increase speed and transparency for foreign-based companies looking to invest. The government also announced state-sponsored grants and rebates for small-to-medium enterprises (SMEs) while rewarding facilities that meet the country’s green technology standards.

India’s Auto-Parts Market Growth

Growth is further expected to accelerate to 8-10% in 2019, and the Indian automotive aftermarket is estimated to reach $13B by 2020; however, exports can potentially be increased to $40B. If this trend continues, the Indian auto-parts industry will become the third-largest in the world by 2025. India’s auto-parts exports may further benefit from higher U.S. tariffs levied on vehicles and parts from America’s longtime automotive trading partners: Europe, Canada, Japan, and Mexico. [1,2]

By flying under the radar of these escalating economic conflicts, top-quality exports from India may become the favored option for OEMs worldwide. As exportable auto parts from India become even more lucrative opportunities for global OEMs, Syrma is already ahead of the curve, offering our formidable engineering resources, versatile 1,800-member workforce, and multiple high-mix, flexible volume ISO-certified manufacturing facilities, delivering world-class electronics and other components for automotive and other verticals.

Backed by 40 Years of Expertise

We contribute our 40 years of design and manufacturing expertise spanning multiple diverse markets. We look forward to discussing how we can deliver world-class products for OEMs across the globe. We understand our home Indian market, familiar with its vast regulatory and selling environments. We foster growth opportunities within India through our strong technology incubation ecosystem. We also assist global OEMs in entering the Indian market by leveraging the local supply chain and favorable operating environments for cost reductions.

Our flagship Chennai location opened in 2006 and lies within a Special Economic Zone (SEZ) for electronics manufacturing, offering economic incentives for imports and exports. This primary facility is within 90 minutes of the Chennai seaport and 20 minutes to the international airport. Additional road and rail connectivity links to the rest of India and beyond and infrastructure advantages with faster import and export clearances. We also have labor force flexibility, both technical and manual, to scale to demand rapidly.

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