By Disha Singh and Sarah Gorecki, Tractus
India’s mobility sector is at a pivotal moment. For decades, global automotive manufacturers have been drawn to the country for its large domestic market, cost-competitive skilled labor and supportive industrial policies. Now, with the rapid adoption of electric vehicles (EVs), robust government incentives and a growing role in global supply chains, India is fast becoming a strategic hub for the future of mobility.
As OEMs reevaluate their operations across Asia, India stands out not only for scale but for innovation, diversification and long-term potential.
India’s modern mobility journey began with the sector’s de-licensing in 1991, opening the doors to private and foreign investment. Over the years, successive governments have introduced initiatives to strengthen the sector, including the ‘Make in India’ campaign and the flagship Production Linked Incentive (PLI) schemes. These programs are designed to boost local production and improve India’s competitiveness in high-value manufacturing.
A Domestic Market with Global Relevance
Between FY2020 and FY2024, the mobility sector attracted over US$36 billion in foreign direct investment (FDI), underscoring growing global confidence. The PLI scheme for the auto and the auto components sector, backed by a $3 billion government outlay, is encouraging domestic manufacturing of Advanced Automotive Technology (AAT) products, particularly those related to electrification, safety and smart mobility
India’s automotive market continues to expand. In FY2023–24, over 20 million vehicles were registered for domestic use. In the same period, exports reached 4.5 million units, making India one of the top vehicle exporters in the world. This shift reflects a broader maturation of the industry: Global OEMs such as Suzuki, Hyundai, Tata Motors, Kia and Toyota have not only deepened their footprint in India but have also made the country a key part of their global value chains.
For new entrants, India offers a dual opportunity: access to one of the world’s largest consumer bases and a growing export platform with established trade linkages across Africa, Latin America and Southeast Asia.
Auto Components: Powering the Next Phase of Growth
The automotive components sector accounts for nearly one-third of India’s mobility industry revenue. With a valuation of $75 billion in 2023, it is targeting $100 billion in exports by 2030. The sector covers a wide array of products — ranging from traditional parts like engine and drivetrain systems to EV-focused components such as battery packs and electric motors.
India is actively working to localize the production of AAT components to reduce import dependence. The PLI scheme encourages 50% domestic value addition in targeted components, including automatic transmissions, hydrogen fuel cells and advanced braking systems.
| Indian Auto Component Industry – Market & Growth | |
| Contribution to GDP (FY 24) | 2.3% |
| Direct Employment (FY 24) | 1.5mn people |
| Industry Turnover (FY 24) | $74.1bn |
| Export Value (FY 24) | $21.2bn |
| Domestic OEM Supply Share (FY 24) | 54% |
| Export Share (FY 24) | 18% |
| Projected Industry Turnover (FY 28) | $111bn |
Source: Ministry Of Information & Broadcasting (Government of India)
This localization push is especially timely as OEMs seek more resilient supply chains. India’s emergence as a hub for automotive components offers significant cost savings and risk diversification for manufacturers serving multiple global markets.
EV Momentum: Infrastructure, Incentives and Supply Chains
India’s electric mobility push is accelerating. As of August 2024, more than 4.4 million EVs had been registered nationwide, driven largely by the two- and three-wheeler segments. The government has introduced several supportive policies:
- FAME II Scheme: Offers subsidies for EV purchases and charging infrastructure.
- Advanced Chemistry Cell (ACC) PLI Scheme: Supports domestic battery cell manufacturing.
- Electric Mobility Promotion Scheme (EMPS): Aims to scale local EV adoption and production post-FAME II.
These initiatives are reshaping investment flows. Major domestic and international players are establishing battery gigafactories, EV production lines and component manufacturing units. India’s EV ecosystem is still in early development, which presents a first-mover advantage for foreign firms with proprietary technologies in areas such as battery management systems, charging hardware and power electronics.
| Total Annual Production of Electric Vehicles (EVs) in 000s | |||||
| Category | FY (20) | FY (21) | FY (22) | FY (23) | FY (24) |
| Passenger Vehicles | 3.30 | 5.83 | 22.36 | 62.28 | 92.17 |
| Commercial Vehicles | 0.53 | 0.41 | 2.22 | 3.11 | 8.66 |
| 3 Wheelers | 143.83 | 91.97 | 185.38 | 404.88 | 632.78 |
| 2 Wheelers | 26.84 | 44.83 | 252.78 | 728.21 | 948.42 |
Sources: SIAM Production Data, Vahan Registration Data
Where to Invest?
India’s mobility sector is geographically diverse, with several industrial clusters catering to different segments:
- Northern Cluster (Delhi-NCR, Haryana, Rajasthan): A legacy hub for passenger vehicles and commercial vehicles. Offers proximity to regulatory centers and a mature supplier network.
- Western Cluster (Maharashtra, Gujarat): Home to Tata Motors, Mahindra and Volkswagen. Strong port access and industrial infrastructure make it ideal for exports.
- Southern Cluster (Tamil Nadu, Karnataka): A center for EV innovation and two-wheeler production. Also hosts R&D hubs and academic institutions.
Choosing the right location requires evaluating more than incentives. Manufacturers must assess labor quality and availability, land costs, power and water reliability, logistics infrastructure and local policy consistency.
The Path Forward: Challenges and Considerations
While the growth potential is significant, India’s mobility sector is not without its challenges. Regulatory complexity, infrastructure bottlenecks and varying state-level policies require careful navigation. Key site selection considerations include:
- Workforce: India offers a large pool of skilled labor, but training requirements can vary by region and specialization.
- Infrastructure: Industrial parks and special economic zones (SEZs) offer plug-and-play setups, but road and port infrastructure may differ by state.
- Policy landscape: National policies are generally business-friendly, but consistency in state-level implementation is critical.
- Land acquisition and utilities: Availability and pricing differ widely across regions. Power quality and cost remain important variables.
Seizing the India opportunity
India’s mobility sector is evolving rapidly, and the window for first-mover advantage is now. With a maturing supplier base, rising domestic demand and strong policy momentum toward electrification, India is poised to play a central role in global automotive and EV supply chains.
| Category | Upcoming Investment Trends |
| Passenger Vehicles | Nine leading PV makers (Maruti Suzuki, Hyundai Motor, Tata Motors, Mahindra & Mahindra, Kia Motors, Toyota Kirloskar, Honda Cars India, Skoda Auto Volkswagen and MG Motors) account for 97% of the domestic India sales and are creating additional capacity of 3 million cars per annum (an increase of 52% capacity). |
| Commercial Vehicles | Tata Motors, Mahindra, and VECV are expanding their manufacturing capabilities in India, especially focusing on Electric Vehicles (EV) segment. |
| 3-Wheelers | Hero MotoCorp is investing heavily in electric 3-Wheeler startups like Euler Motors. |
| 2-Wheelers | Honda plans to set up a dedicated electric 2-Wheeler manufacturing facility in India by 2028. |
| Auto Component | Several auto component manufacturers (BMW, Craftsman Automation Ltd., Seinumero Nirman, Usui Susira International etc.) are planning new plants in India, with a focus on capacity expansion and localization, particularly for EV parts. |
Source: Tractus
As global manufacturers seek new destinations to expand and diversify operations, India offers more than just a cost advantage, it offers scale, talent, policy alignment and a growing appetite for innovation. Successful investment, however, hinges on thoughtful site selection and a deep understanding of local dynamics.
Disha Singh is a Tractus consultant based in the Indian office. Sarah Gorecki is the Tractus marketing coordinator based in the Thailand office. Tractus has 30 years of experience supporting global companies with market entry, site selection and implementation in India and across Asia. Visit tractus-asia.com for more information.