The first-half performance shows the industry staying resilient, supported by domestic demand and a strong aftermarket, while navigating global challenges with cautious optimism.
Despite strong domestic growth in H1 FY26, the Indian auto component industry faces uncertainty in the US export market when it comes to new business, Mr. Sriram Viji, President-Designate, ACMA and Managing Director, Brakes India Pvt Ltd., has said.
At a recent interaction announcing performance during the above period, Mr. Viji said fresh awards are currently hard to predict, but existing export programmes are expected to run longer.
During a recent interaction while announcing performance for the period, Mr. Viji said fresh awards are difficult to predict, but existing export programmes are expected to continue for longer. This is largely because of strict supplier qualification processes, which make it difficult for global OEMs to switch suppliers quickly—offering some stability to Indian exporters.
At the same time, the industry is pushing harder to improve its competitiveness through localisation, efficiency and scale. The depreciation of the rupee against the dollar has also provided some cushion, helping exporters manage cost pressures. While headwinds remain, the direction is clear—the industry enters the year with cautious optimism and confidence in its long-term fundamentals, he pointed out.
A Home Market That Holds Firm, A World Still Opening Up
On the home front, the story remains encouraging. The industry continues to move in a positive direction, supported by steady domestic demand and policy support. Recent changes in GST and its reorganisation have given the industry a timely boost, easing pressure across the value chain and helping component makers stay competitive, he said.
Exports, however, tell a more layered story. Challenges remain, especially in a volatile global environment, but efforts are underway to open new doors. The government is actively pursuing bilateral trade agreements to safeguard national interests and create fresh export opportunities. With Indian manufacturers already strong in cost efficiency and manufacturing quality, these agreements could help the industry tap new markets. Progress is visible in talks with the UK and New Zealand, while discussions with the European Union continue.
Industry Performance
The first half of the year tells a story ofresilience for India’s auto component industry. Despite global uncertainties, the sector continued to move forward, with total turnover rising to $41.2 billion from $39.9 billion—close to a 7% growth. Much of this momentum came from the domestic market, which held firm and provided a stable base when international conditions remained challenging.
Sales to vehicle manufacturers grew by about 7.3%, led largely by passenger vehicles, which accounted for more than half of this growth. Light commercial vehicles also played an important role. Passenger vehicles continue to dominate OEM supplies, contributing over 40% of industry turnover, followed by commercial vehicles at nearly a quarter and two-wheelers at around a fifth. At the same time, supplies to electric vehicles kept rising steadily, now accounting for roughly 5% of OEM demand, signalling a gradual but clear shift toward new-age mobility.
Away from factory gates, the aftermarket emerged as a bright spot. It grew by a strong 9% in the first six months, compared to 6% in the previous year. A growing vehicle population, increasing formalisation of repairs, and better internet reach have helped genuine parts and e-commerce platforms penetrate deeper into smaller towns and remote areas, strengthening this segment.
Exports, too, delivered a pleasant surprise. They grew by about 9.3% in the first half, exceeding initial expectations despite severe headwinds such as raw material constraints, logistics disruptions, tariff pressures and weak demand in key markets like Europe and the US. The US remained the single largest export destination, followed by Germany, Thailand, Brazil and the UAE. While exports to the US were steady in the first half, the full impact of revised US tariffs on auto components is expected to be felt more strongly in the second half, a concern for an industry that operates on thin margins.
Imports grew faster than exports, rising by 12.5% to $ 12.3 billion, resulting in a trade deficit after last year’s surplus. Asia, led by China, continued to dominate imports, with Japan, Germany and South Korea also contributing significantly—largely linked to global vehicle manufacturers operating in India.
Across both domestic sales and international trade, engine components remained the largest contributor to turnover, accounting for nearly a quarter of sales. They were followed by suspension and braking systems, body and chassis parts, and drive transmission. In exports and imports alike, engine components and drive transmission and steering parts continued to dominate.
Why the Industry Is Backing the India–EU Trade Push
For India’s auto component makers, free trade is not a new idea—it is a natural extension of being part of a global industry, Mr. Vinnie Mehta, Director General, ACMA, said. That is why the sector is largely supportive of the proposed Free Trade Agreement between India and the European Union. The support, however, comes with a clear condition: “any agreement must work both ways,” he said. Trade, the industry believes, should remain balanced, without tilting heavily in favour of imports or exports on either side.
“In the case of India and the EU, that balance already exists. The current trade relationship is seen as fairly even, giving component manufacturers the confidence to back the agreement,” he mentioned.
More than immediate trade gains, the industry is looking at the bigger picture. An India–EU FTA is expected to unlock fresh investment opportunities, encouraging European companies to deepen their presence in India. Over time, this could help Indian suppliers absorb advanced technologies, improve capabilities and move up the value chain. For the auto component industry, the real promise of the agreement lies not in short-term trade numbers, but in long-term investment and technology flow.