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As the world transitions toward electric mobility, Autonomous Driving ,\u00a0Advanced Driver Assistance Systems (ADAS), the Internet of Things (IoT),\u00a0and sustainable production, the Indian automotive sector can emerge as a key player in the global value chain (GVC), according to a report by NITI Aayog.\u00a0<\/p>\n

While the local automotive industry, having made significant strides to position India as the world\u2019s fourth-largest automobile producer after China, the US and Japan, its share in the global traded auto component market remains modest at just 3%\u00a0($20 billion), reflecting untapped potential and underlying challenges, the report laments.\u00a0<\/p>\n

\u201cWith a near-neutral trade balance and a cumulative cost disability of nearly 10% compared to competitors like China, India\u2019s auto component sector faces structural hurdles that impede its competitiveness,\u201d as per the report.\u00a0<\/p>\n

\u201cThese include supply chain inefficiencies, high material and equipment costs, and limited penetration in high-precision segments like engine and transmission systems,\u201d according to it.<\/p>\n

Envisioning a bold future for India\u2019s automotive component production, the report forecasts that it may reach the size of $145 billion by 2030, with auto component exports tripling to $60 billion, yielding a trade surplus of $25 billion.\u00a0<\/p>\n

Such growth promises to create 2 to 2.5 million additional direct jobs, bolster ancillary industries, and elevate India\u2019s GVC share to 8%, it emphasized.\u00a0<\/p>\n

In a message for the report, NITI Aayog Vice Chairman Suman K. Beri said, \u201cThe COVID-19 pandemic revealed supply chain weaknesses, while recent geopolitical uncertainties and resulting disruptions have driven manufacturers to seek more reliable and cost-effective production hubs.\u201d<\/p>\n

\u201cIn this context, India offers a unique opportunity to emerge as a trusted global manufacturing partner. With its expanding production capabilities, competitive costs, skilled workforce, and growing technological expertise, India is well-positioned to play a larger role in the global automotive supply chain,\u201d he said.<\/p>\n

As per the report one of the most significant transformations in the global manufacturing landscape is the increasing interdependence between the automotive industry and advanced sectors such as electronics, semiconductors, and artificial intelligence.\u00a0<\/p>\n

\u201cWith the integration of these cutting-edge technologies, the cost of semiconductor chips per vehicle is projected to double, rising from $600 to $1,200 by 2030,\u201d it said.<\/p>\n

The global automotive component market was valued at approximately $2 trillion in 2022, underscoring its critical role within the global automotive industry. Of this, around 30%\u2014or $700 billion\u2014constitutes the traded automotive component market.\u00a0<\/p>\n

As per the report achieving this ambition demands a concerted effort to address cost disadvantages, enhance infrastructure, and integrate advanced technologies such as Industry 4.0.\u00a0<\/p>\n

\u201cThe shift towards electric vehicles (EVs) and next-generation features like ADAS further underscores the urgency of aligning India\u2019s capabilities with global trends,\u201d the report flags.<\/p>\n

To realise this vision, the NITI Aayog has proposed a comprehensive set of fiscal and non-fiscal interventions.\u00a0<\/p>\n

These include targeted operational support for identified components and capital expenditure support for tools and dyes, cluster development to strengthen supply chains, measures for improving R&D and skill-building initiatives to nurture talent.\u00a0<\/p>\n

\u201cEqually critical are measures to foster international collaboration through joint ventures and free trade agreements, alongside efforts to elevate quality standards and build a globally competitive brand for Indian auto Components,\u201d the authority said.<\/p>\n

\u201cThis holistic approach aims not only to enhance export potential but also to position India as a hub for high-quality, technology-driven manufacturing. The timely implementation of these recommendations offers a powerful pathway to unlock India\u2019s potential, driving economic growth, job creation, and technological advancement,\u201d it added.<\/p>\n