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

The Indian auto parts sector is expected to grow around 8-10% in the current financial year on the back of domestic demand and strong exports despite geopolitical headwinds, industry body ACMA said on Tuesday.

The Automotive Component Manufacturers Association of India (ACMA) said the industry recorded a turnover of ₹ 7.60 lakh crore ($85.9 billion), registering a growth of 12.7% in rupee terms compared to the previous fiscal. For the first time in two years, a trade deficit was created as exports from the country were less than imports of auto components, especially electronic parts and electric vehicle parts, with China accounting for the largest share with 36% of total imports. The industry also witnessed labor shortages, especially in small and medium-sized businesses, following the West Asian war, which led to workers relocating to their hometowns due to rising costs of living in towns and cities due to rise in energy costs. “The medium and long-term outlook for the Indian auto component industry remains positive,” ACMA President Vikrampati Singhania told reporters here.

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

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 like this, there should be no reason why we cannot maintain the growth rate we have. We can expect growth of 8 to 10% for the year.” “Geopolitical challenges such as the West Asian crisis, the tariff situation in the US, the industry’s largest export market and China’s trade restrictions are some of the headwinds the industry will face going forward,” he added. On the other hand, Mr. Mehta pointed out that the government’s carbon neutrality, multiple free trade agreements and growing global reliance on Indian manufacturing, rising domestic demand, infrastructure development, capacity expansion by OEMs and new entrants in the mobility space are tailwinds for the components industry.

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

He added that the industry has more than doubled in size in the last five years, growing at a Compound Growth Rate (CAGR) of 17%, reaffirming India’s emergence as a globally competitive automotive manufacturing base.

ACMA said the auto parts industry remains well positioned to strengthen India’s role as the preferred global automotive manufacturing and supply hub.

Exports rose 5% to $24 billion (₹2,12,176 crore) in the last fiscal.

ACMA stated that Europe recorded the strongest growth, with engine components, drive transmission and steering continuing to account for more than half of exports. On the other hand, imports increased by 13% to $25.4 billion (₹2,24,287 crore), driven by rising demand for advanced technologies and specialty components. The report stated that China, Japan and Germany continue to be the leading source markets.

Commenting on the trade deficit, Mehta said, “This time around, we had some trade deficit since the beginning of the last two years when we had a trade surplus.” He stated that in addition to the stable growth in the EV segment, where localization is not high, electronic parts imports are the main responsible for the increase in total imports.

Electric vehicle parts supplies accounted for 4.6% of domestic OEM supplies, excluding lithium-ion batteries.

Mr. Mehta also noted that the component industry was also facing labor shortage issues after the outbreak of the West Asian crisis as “the cost of living in towns and cities has increased a lot as energy costs have increased” and most of the companies even gave induction cookers and stoves to workers to keep them.

However, he stated that there was no impact on production and “there was no reduction in terms of production.”

It was published – 07 July 2026 08:21 IST