India’s automotive component industry is recalibrating sourcing, re-routing logistics, and reorganising production to mitigate the impact of geopolitical disruptions that are straining energy supplies, raw materials, input costs, and exports.
Vinnie Mehta, Director General of The Automotive Component Manufacturers Association (ACMA), termed it a “multi-headed challenge”. “This is a multi-headed challenge, with simultaneous pressures on energy, raw materials and exports beginning to impact production,” He added that fuel constraints and logistics bottlenecks are tightening operations. “If production is affected, both domestic supply and exports will inevitably take a hit.”
Automakers are closely tracking the evolving situation. “We are closely monitoring the situation and evaluating the financial implications. As the situation evolves, the company will take a call on how to deal with these escalating costs,” said Jyoti Malhotra, Managing Director, Volvo Car India, flagging West Asia developments as a concern for costs and supply chains.
Tata Motors said mitigation measures have kept plants running near normal. “We are working closely with our supplier and logistics partners to manage volatility and ensure continuity, while optimising production schedules wherever required,” a spokesperson said, adding that the company continues to monitor fuel availability and supply-chain risks.
Mahindra spokesperson said, “We have not lost any production this month vs our plan to date. We have teams working on every aspect of our supply chain, and they are proactively taking steps necessary to mitigate risks. The situation remains fluid, and we are watching it closely.”
Strategic Buffers
Luxury carmakers are taking a calibrated approach. “We will respond flexibly depending on the evolving market situation,” Mercedes-Benz India said, while continuing to monitor developments. BMW India is expected to see limited impact as most imports are routed through alternative sea lanes.
Component makers are responding by accelerating localisation, diversifying sourcing and building buffers to ensure continuity of supplies to OEMs.
Suppliers are tightening domestic linkages. “With a diversified manufacturing footprint and strong domestic sourcing, we have further reduced exposure to disruptions,” said Aditya Goyal, Founder, Modern Automotives, adding that strategic sourcing and inventory planning have helped offset volatility so far.
Firms are also reworking logistics and inventory strategies. Carraro India has rerouted European imports via the Cape of Good Hope while stepping up localisation and nearshoring. “We are buffering inventory for critical inputs and collaborating closely with OEMs to build lead-time buffers,” said Dr Balaji Gopalan, MD, Carraro India.
The industry is moving away from strict just-in-time practices towards holding inventory for key components, using material substitution, and selectively deploying air freight to avoid delays. Exporters are also adjusting delivery timelines amid longer shipping cycles and port congestion.
Energy Crunch
Energy shortages are adding to operational stress. “The auto component manufacturing industry was experiencing shortages of LPG, furnace oil, and several key lubricants,” said Ajinkya Firodia, Vice Chairman and Managing Director, Kinetic Engineering. “While our suppliers are making every effort to support us, they too are facing cost pressures.” He added that operations are being sustained through outsourcing and process optimisation. “We are actively optimising our production processes… to ensure efficiency and maintain output quality.”
The impact is sharper for MSMEs, where working capital pressures are intensifying. “Uneven arrivals of coal, coke, and alloys are forcing stop-start production runs, lowering plant utilisation,” said Suryansh Jalan, Chief Business Officer, FarEye. “The cash flow hit is coming from both ends simultaneously.”
The stress is visible at the cluster level. Around 7,500 MSMEs in the Pimpri-Chinchwad industrial belt have shut or are at risk due to gas shortages, with over half of the region’s units affected. These include fabrication, coating and other energy-intensive units. Sandeep Belsare, President, Pimpri-Chinchwad Small Industries Association, said many firms are operating at reduced capacity, with high costs limiting a shift to alternative technologies.
Rating agency ICRA said indirect risks could arise from disruptions in passenger vehicle exports, 25–30% of which are linked to West Asia. It added that supply-chain disruptions, energy costs, gas availability and currency volatility remain key monitorables. Even so, the industry’s response points to a gradual shift towards more resilient, regionally anchored supply chains despite persistent global uncertainties.