Indian auto component industry logs 6.8% growth at ₹3.56 lakh crore in H1 FY26 as exports hold firm despite global pressures

India’s automobile component industry posted steady growth in the first half of financial year 2025–26, bolstered by resilient domestic demand and a strong aftermarket, even as global headwinds weighed on trade dynamics.

According to the Automotive Component Manufacturers Association of India’s (ACMA) Industry Performance Review, industry turnover rose 6.8% year-on-year to ₹3.56 lakh crore during April–September 2025, compared with ₹3.33 lakh crore in the same period last year. The growth was driven by higher supplies to vehicle manufacturers, continued recovery in the aftermarket, and ongoing investments in localisation and capacity expansion.

OEM supplies and aftermarket drive domestic growth

Supplies to original equipment manufacturers (OEMs) increased 7.3% to ₹3.05 lakh crore, led largely by passenger vehicles (PVs) and light commercial vehicles. The aftermarket segment outperformed OEM supplies, expanding 9% to ₹53,160 crore, aided by a growing vehicle parc, greater formalisation of the repair ecosystem and deeper penetration of organised service channels.

Electric vehicle (EV)-related components accounted for 4.6% of total supplies to OEMs, highlighting the gradual shift towards new mobility technologies, even as internal combustion engine (ICE) vehicles continued to dominate overall volumes.

Vinnie Mehta, Director General, ACMA, said, “H1 FY26 performance reflects the underlying strength of India’s automotive ecosystem, with growth across OEM supplies and the aftermarket.”

Exports surge, but burgeoning imports lead to trade deficit

On the external front, exports of auto components rose 9.3% year-on-year to $12.2 billion, despite disruptions in global supply chains, volatile raw material prices and subdued demand in key overseas markets. The United States and Germany remained among the top export destinations during the period.

Imports, however, grew at a faster pace of 12.5% to $12.3 billion, resulting in a trade deficit of about $180 million in H1 FY26. This marked a reversal from a $150 million surplus recorded in the corresponding period of FY25. China, Japan and Germany continued to be the primary sources of imported components, as per ACMA’s findings.

As Mehta put it, “On the trade side, export growth has remained healthy, though imports have risen at a faster pace, leading to a marginal trade deficit. The industry is responding through deeper localisation, capacity expansion and closer collaboration with stakeholders, while preparing for the next phase of growth driven by new mobility technologies.”

Supply-chain risks and material constraints remain key concerns

Industry executives said the first-half performance reflected the underlying strength of India’s automotive ecosystem but cautioned that operating conditions remain challenging. Supply-chain uncertainties, geopolitical tensions, rising freight costs and the limited availability of critical materials, including rare-earth magnets, continue to pose risks to margins and production planning.

According to Sriram Viji, President-Designate, ACMA and Managing Director, Brakes India Pvt Ltd., “Addressing challenges such as the availability of critical materials, including rare-earth magnets, and enhancing supply-chain resilience will be critical for sustaining long-term growth.”

Policy support and seasonal demand to shape H2 outlook

Looking ahead, the industry expects demand momentum to improve in the second half of FY26, aided by seasonal buying patterns, infrastructure-led activity and improving retail sentiment. The recent reduction in GST rates on select vehicle categories, effective after September, is expected to support demand, particularly in passenger vehicles and two-wheelers, with potential spillover benefits for component manufacturers.

While tractors have remained resilient and commercial vehicles are showing early signs of recovery, ACMA said sustained growth would depend on improving capacity utilisation, deeper localisation and enhanced supply-chain resilience amid an uncertain global environment.

Elaborating on the industry outlook, Vikrampati Singhania, President, ACMA and Managing Director, J K Fenner (India) Ltd., said, “While demand conditions in the first half were driven largely by underlying domestic fundamentals, the second half of the fiscal is expected to benefit from improving retail sentiment, supported by recent policy measures, seasonal demand and continued infrastructure-led activity.”