According to a recent report by Ambit Capital, Indian consumers’ preference for premium vehicles and features like sunroofs and advanced driver-assistance systems (ADAS) will continue to drive demand for high-end automotive components in the Indian auto market.
From a segmental perspective, India’s two-wheeler industry has seen a clear shift towards premiumization, with models above 125cc growing 19% over the last decade.
The report further says that in the passenger vehicle segment, cars above INR 1.5 million have grown 20% over the last ten years. Feature adoption is also accelerating: sunroof penetration has gone up from 4% in 2019 to 26% in 2023 and automatic transmission has grown 13% in the last four years.
While Electric Vehicles in India (EVs) pose a big threat to traditional internal combustion engine (ICE) component suppliers, it also presents an opportunity for transformation in the India EV car segment. Many companies are moving into EV-centric areas like lithium-ion batteries, traction motors, control systems and battery management systems (BMS). Also, growth of electric mobility is driving adoption of advanced technologies like regenerative braking, ADAS and intelligent cockpits. Notably, electric cars in India will also drive demand for certain conventional parts like wiring harnesses, electronic control units (ECUs) and differential assemblies.
The report forecasts differentiated India’s EV market penetration across vehicle categories. In two-wheeler segment, EV penetration will decline from 21% in FY29 to 6.3% in FY25 and for photovoltaic vehicles from 10.4% to 2.6% during the same period. Three-wheeler (3W) segment will see rapid electrification with penetration growing from 22.9% in FY25 to 67.9% in FY29.
The report also says that while many EV-specific components are still import-dependent, their growth potential will attract intense competition in the early stages of industry development.Global automotive components market is over USD 450 billion and India is only about 2% of this market, reflecting its limited international presence in electric cars and related parts.
But Ambit Capital says India can expand its global share with factors like large domestic market, mature supply chain ecosystem, strong engineering talent pool and low power and labour costs. The country is also aligning its emission and safety standards with global norms which will further boost its competitiveness in the Indian auto market.
The report says India has not fully leveraged the opportunities arising out of global supply chain realignment. Between FY2019 and FY2024, exports have been around 16% of total sales, partly because Chinese suppliers have set up facilities in Southeast Asia and weak demand in major global markets.
