Auto Component Sector Grows 12.7 Percent Despite Widening Trade Deficit

India's auto component industry recorded robust growth of 12.7% in FY26, according to the latest report from the Automotive Component Manufacturers Association of India (ACMA). This expansion was primarily driven by a 16.3% increase in supplies to Original Equipment Manufacturers (OEMs), reflecting strong vehicle production across passenger vehicles, commercial vehicles, and two-wheelers. The aftermarket segment also contributed to this positive momentum, growing by 9% due to a larger vehicle base and increased market formalization.

The growth in the component sector is intrinsically linked to the high demand for new vehicles in the domestic market. As vehicle production scales, the demand for localized components has surged, benefiting domestic manufacturers. However, the ACMA report highlights a significant structural concern: imports of auto components are currently growing at a faster rate than exports. This trend has resulted in a widening trade deficit for the sector, posing a challenge to the long-term sustainability of the industry's growth trajectory.

Stakeholders are now focusing on balancing the rapid growth in domestic supply with the need to improve export competitiveness. While the formalization of the aftermarket provides a stable revenue stream, the industry must address the import-export imbalance to ensure that the growth in the component sector translates into a healthier trade balance. Future efforts will likely focus on enhancing local manufacturing capabilities to reduce reliance on imported components, particularly as the industry continues to evolve alongside the broader automotive ecosystem.