India’s auto component industry delivered resilient growth in the first half of FY26, but rising imports underline the structural challenges that lie ahead, even as export competitiveness improves.
According to industry body ACMA, the auto component sector recorded 6.8% growth in H1 FY26, defying global demand uncertainty and supply-chain disruptions. Growth was driven primarily by domestic demand as well as steady export momentum, reflecting India’s growing role in global OEM sourcing strategies.
Supplies to original equipment manufacturers (OEMs) rose 7.3%, led by sustained demand from passenger vehicles and light commercial vehicles. The aftermarket grew a robust 9%, supported by expansion, improved utilisation levels and increasing formalisation across service and replacement channels.
Exports emerged as a key bright spot. Auto component exports rose 9.3% year-on-year to $12.2 billion in H1 FY26, despite weak demand in some overseas markets. According to Ravi Bhatia of JATO Dynamics, the export performance underscores India’s improving competitiveness as a sourcing hub amid global uncertainty. However, he cautioned that rising imports and the return to a trade deficit highlight the need for sharper strategic focus.
Trade Paradox
Imports grew 12.5% during the period, pushing the industry back into a marginal trade deficit and reinforcing concerns around localisation gaps, particularly in high-value and technology-intensive components. Industry executives say this trend underscores the urgency for deeper localisation, smarter portfolio choices and clearer export market prioritisation.
Transition Phase
Electrification continues to gain gradual traction. EV components accounted for 4.6% of OEM supplies in H1 FY26, reflecting steady but measured progress as suppliers balance investments between internal combustion engine platforms and emerging electric technologies.
Looking ahead, policy tailwinds, including GST rationalization that was announced last year and the impact of Free Trade Agreements (FTAs) are expected to reshape sourcing and demand patterns in the second half of FY26. Analysts say suppliers that adopt data-led market prioritisation with regional technology trends are likely to benefit most.