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India’s Automotive Sector Amid Global Uncertainty
Articles- Sep 27,25
The automotive industry is both an engine of growth and a bellwether of India’s global competitiveness. However, the industry needs to build up a strategic roadmap for global success, writes Jupiter Kalra, Head of Sales & Marketing, Mechatronics division, MAHLE India.
The global automotive industry is undergoing its most profound transformation in over a century. Supply chain disruptions, intensifying tariff regimes, the shift to electric mobility, and environmental, social and governance (ESG) compliance are rewriting competitive dynamics. For India, these uncertainties coincide with the maturing of its “Make in India” initiative, launched in 2014 to position the country as a global manufacturing hub.
The automotive sector—one of India’s largest industries—is central to this ambition. With turnover exceeding Rs 20 trillion in FY25, accounting for ~6.5 per cent of GDP and nearly 14–15 per cent of GST revenues employing 37 million+ people directly and indirectly, the industry is both an engine of growth and a bellwether of India’s global competitiveness. India is already the third-largest automobile market by sales in the world, with over 31 million vehicles produced in FY25. As global headwinds multiply, the question is not whether India can participate in global value chains, but whether it can lead in segments of the future—electric mobility, advanced automotive components, and clean technology.
Comparisons with global peers
While automotive manufacturing hubs like China, Mexico, Vietnam, Eastern Europe continue to benefit from established supply chains, favourable trade agreements, and infrastructure investments
India has cost advantages (labour, domestic demand), but lags in terms of integrated component supply chains (e.g. semiconductors, advanced batteries), and in some cases in regulatory, logistics, and infrastructure efficiency.
India’s unique advantage is scale plus cost
A large domestic market allows manufacturers to reach scale just producing for local consumption before exporting to other countries. However, we need to focus on adding value rather than just being an assembler.
In today’s rapidly changing global environment—shaped by US and European tariffs, fragile supply chains, and growing demands for ESG compliance—India’s reforms are strengthening its manufacturing and automotive sectors. Key measures include a streamlined tax system, lower logistics costs through removal of inter-state check posts, and production-linked incentives (PLI) worth Rs 1.76 trillion across 14 sectors. These PLIs have already created 12 lakh jobs and generated exports worth Rs 5.3 trillion. In addition, schemes like FAME, improved ease of doing business, and ongoing FTA negotiations are helping local manufacturers expand confidently despite global challenges.
Thanks for governmental efforts in policies as listed above, various emerging opportunities for India have come up, some of them are being summarized below:
- EV & battery manufacturing: Battery demand expected to reach 260 GWh by 2030 opening opportunities for domestic cell manufacturing, reducing reliance on imports.
- Affordable EV exports: India’s two- and three-wheelers can address growing demand for affordable urban mobility in Africa, Southeast Asia, and Latin America.
- Advanced components: Traction motors, power electronics, ADAS, connected vehicle software are growing global markets. India’s IT and engineering strengths can be leveraged.
- Green manufacturing: India’s renewable energy base (175 GW+ installed) provides an edge for producing low-carbon vehicles and components.
- China+1 strategy: MNCs diversifying away from China see India as a scale alternative which requires quick progress in infrastructure, logistics, and trade facilitation.
India needs to build up a strategic roadmap for global success. Some of key steps to be taken are as follows -
- Build resilient supply chains: Prioritize localization of battery cells, semiconductors, and critical electronics and develop strategic mineral partnerships (Australia, Africa, Latin America).
- Move up the value chain: Shift from assembly to design and innovation at same time Investing into R&D hubs for EV technology, fuel cells, and lightweight materials.
- Digital transformation & productivity: Deploy Industry 4.0 tools: AI-driven predictive maintenance, digital twins, smart factories. Reduce waste, improve quality, cut costs to match global benchmarks.
- Forge global partnerships: Collaborate with global OEMs (for technology) and local startups (for innovation), Use JV models to accelerate skill and knowledge transfer.
- Sustainability as competitive advantage: Adopt renewable energy in factories, implement circular economy practices (battery recycling, green steel) thereby positioning “Made in India” products as low-carbon alternatives.
- Trade & export strategy: Push for favorable FTAs with EU, UK, ASEAN, and Africa and Set up overseas distribution hubs for Indian OEMs.
- Talent & skill development: Expand training in high-voltage EV systems, embedded software, power electronics by Leveraging India’s IT strength to integrate software-driven automotive solutions.
Growth roadmap
To conclude, India has two pathways: remain a cost-competitive assembly hub, or evolve into a global centre of innovation, advanced manufacturing, and clean mobility. The latter requires aggressive localization of batteries and semiconductors, deeper trade integration, digital transformation, and sustainability leadership.
If these priorities are pursued in tandem by government and industry, India’s automotive sector can not only withstand global uncertainty but emerge as a pillar of global supply chains in the 2030s—delivering jobs, technology leadership, and export competitiveness.
About the author:
Jupiter Kalra is currently handling Sales & Marketing for MAHLE’s Mechatronics division at MAHLE in India, along with being responsible for Strategy, Forecasting & Processes for MAHLE in Asia Pacific w/o China. He has been associated with MAHLE since March 2012 and has had privilege of working on various executive roles while living & working in Japan, Germany and India.
Jupiter Kalra
Mechatronics
MAHLE India
auto components
Indian automotive industry
Electric vehicles
EVS
PLI Scheme
Make in India
US tariff
China+1 strategy
Automotive components
Battery manufacturing
global supply chains
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