Modi’s Vision is Steering India Towards Becoming a Global Automotive Powerhouse

India’s automotive sector, long regarded as the engine of industrial growth, is now poised for a transformative leap onto the global stage. With the recent release of the comprehensive report titled “Automotive Industry: Powering India’s Participation in Global Value Chains” by NITI Aayog, the roadmap for India’s ascent in the global automotive ecosystem has been clearly laid out. This move is emblematic of the Modi government’s larger ambition to make India a manufacturing powerhouse under its flagship initiatives like ‘Make in India’, Atmanirbhar Bharat, and Production-Linked Incentive (PLI) schemes.

From Factory Floors to Global Headlines

India’s auto industry, the fourth-largest vehicle producer globally, has evolved from being a domestic champion to a serious global contender. The NITI Aayog report, launched in the presence of Shri Suman Bery (Vice Chairman), Dr. V.K. Saraswat and Dr. Arvind Virmani (Members), and CEO Shri BVR Subrahmanyam, outlines an ambitious yet achievable vision: tripling auto component exports from $20 billion to $60 billion by 2030, expanding global value chain (GVC) participation from 3% to 8%, and creating 2-2.5 million new jobs in the process.

India’s Global Automotive Presence: Current Snapshot

Global Production Ranking: 4th, after China, USA, and Japan

Annual Vehicle Production: Nearly 6 million units

Global Auto Components Market: Valued at $2 trillion, with $700 billion in exports

India’s Share in Component Trade: ~$20 billion (~3% share)

India has established a stronghold in the compact and utility vehicle segments, gaining export momentum with models like the Maruti Suzuki Swift and Hyundai i20 being shipped to global markets. Despite this, the country’s penetration into high-precision component manufacturing — such as drive transmissions and engine parts — remains low, accounting for merely 2–4% of the global share.

The Modi Government’s Strategic Push

The Modi government’s consistent policy thrust has created fertile ground for automotive growth:

1. PLI Scheme for Automobiles and Auto Components
The Production-Linked Incentive (PLI) scheme, with an outlay of ₹25,938 crore, is a strategic move by the Modi government to push India’s automotive sector into the era of advanced mobility. By incentivizing the manufacturing of high-tech components like electric powertrains, sensors, and hydrogen fuel cells, the scheme is helping Indian manufacturers scale up their capabilities, attract global OEMs, and shift from volume-based to value-based exports. This initiative is central to making India a globally competitive auto manufacturing destination.

2. National Electric Mobility Mission Plan (NEMMP) and FAME Scheme
To fast-track the adoption of electric vehicles (EVs), the Modi government launched the NEMMP and the FAME schemes. These initiatives provide substantial subsidies for EV buyers, promote localization of components, and facilitate the creation of charging infrastructure. FAME-II, in particular, is driving large-scale EV deployment in public transport and two-wheelers. Together, these schemes are positioning India as a significant player in the global EV supply chain while supporting its sustainability commitments.

3. Vehicle Scrappage Policy
The vehicle scrappage policy, a crucial reform under the Modi government, aims to phase out old, polluting vehicles and replace them with fuel-efficient, eco-friendly models. It stimulates demand for new vehicles, boosts component production, and promotes metal recycling, creating a circular economy within the automotive ecosystem. The policy also opens up new avenues for organized scrappage centres and green mobility entrepreneurship, enhancing environmental as well as economic value.

4. PM Gati Shakti Mission
Logistics and infrastructure have long been bottlenecks for India’s manufacturing sector. The PM Gati Shakti Mission addresses this by integrating highways, ports, railways, and logistics parks into a unified planning framework. By reducing logistics costs and improving time-to-market, this mission strengthens India’s supply chain efficiency. For the automotive sector, where just-in-time delivery and component flow are critical, this reform significantly boosts export competitiveness and domestic operational efficiency.

5. Skill India and SAMARTH Initiatives
Recognizing that human capital is vital for sustaining Industry 4.0 transformation, the Modi government has pushed forward with Skill India and SAMARTH (Smart Advanced Manufacturing and Rapid Transformation Hubs). These initiatives focus on equipping India’s youth with cutting-edge skills in robotics, mechatronics, AI, and automation — essential for modern auto manufacturing and R&D. By building a future-ready workforce, India ensures that its automotive growth is not only driven by machines but also by skilled minds.

These initiatives are not standalone; they converge in creating a globally competitive, digitally enabled, and future-ready automotive ecosystem.

The EV Revolution and Battery Value Chains

One of the most seismic shifts in the industry is the pivot to electric mobility. Driven by rising global demand for sustainable alternatives and carbon neutrality goals, the EV sector is now a battlefield for innovation and global market capture.

India has launched its Battery Energy Storage Systems (BESS) policy and is focusing on battery cell manufacturing to reduce import dependence. With government-backed incentives, India is expected to emerge as a competitive player in the lithium-ion battery value chain, positioning itself as a hub for EV components, battery recycling, and energy storage solutions.

Emerging Tech & Industry 4.0: A New Era

Digital transformation is re-defining automotive manufacturing worldwide. India is embracing this wave:

Digital Transformation: Driving the Future of Indian Automotive Manufacturing
As the global automotive industry undergoes a paradigm shift driven by digital innovation, India is rapidly embracing Industry 4.0 to stay competitive and future-ready. Digital transformation is not just an add-on; it is becoming central to how vehicles are designed, developed, and manufactured. Under the conducive policy environment shaped by the Modi government, Indian automotive hubs are becoming testbeds for smart, data-driven production systems.

Smart Factories Leading the Revolution
Industrial clusters in Pune, Chennai, Sanand, and Hosur are now home to Smart Factories that integrate AI, IoT, Machine Learning, and robotics. These technologies are automating precision-heavy processes, enabling real-time monitoring, predictive maintenance, and flexible production lines. Smart manufacturing is minimizing downtime, enhancing efficiency, and allowing quick adaptations to changing consumer demands — key to thriving in global value chains.

Digital Twin and 3D Printing: Speed Meets Precision
Digital twin technologies, which create real-time virtual replicas of physical systems, are revolutionizing prototyping and testing phases in automotive development. Alongside, 3D printing (additive manufacturing) is cutting down lead times for tool and component development while improving quality and customization. This not only reduces production costs but also boosts India’s capability in rapid design-to-market transitions — a crucial advantage in today’s agile global markets.

Connected and Autonomous Vehicles: India’s Next Leap
The rise of connected vehicles, telematics, and autonomous driving technologies is opening new innovation frontiers for Indian OEMs, startups, and global MNCs. From in-car infotainment to ADAS (Advanced Driver-Assistance Systems), Indian firms are developing critical tech that powers the mobility of tomorrow. The Modi government’s push for indigenous tech development, 5G rollout, and startup incentives is catalyzing this digital automotive ecosystem.

A New Era of Innovation and Global Relevance
Digital transformation is redefining not just how India makes cars but also how it competes globally. The convergence of hardware and software, along with supportive initiatives like the Digital India mission, is enabling Indian manufacturers to leapfrog legacy challenges. With a growing digital talent pool, progressive regulation, and integrated infrastructure, India is well-positioned to lead in the next era of smart mobility and digital manufacturing.

NITI Aayog’s emphasis on R&D, IP transfer, and international branding is aimed at pushing India up the complexity ladder from conventional simple parts to emerging complex components like semiconductors, LIDAR systems, and e-powertrains.

Challenges to Address

Despite the strong foundation, India must overcome key roadblocks to scale its GVC presence:

1. Moderate R&D Spending Limits Innovation Edge
Despite its scale, India’s automotive sector suffers from low investment in research and development. India allocates only about 0.3% of its GDP to R&D, significantly lower than the ~2% average in advanced economies like Germany, South Korea, or Japan — all global leaders in automobile innovation. This restricts India’s capacity to develop cutting-edge automotive technologies such as EV batteries, autonomous systems, or high-precision components. For India to move up the global value chain, there is an urgent need to boost public-private R&D collaboration, incentivize indigenous innovation, and facilitate knowledge transfer through global partnerships.

2. Operational Costs and Logistics Inefficiencies Hinder Competitiveness
India’s average logistics cost remains high at 13–14% of GDP, compared to 8–10% in developed economies. Poor last-mile connectivity, inadequate multimodal transport integration, and bureaucratic hurdles increase lead times and cost overruns, affecting India’s attractiveness as a manufacturing hub. Although infrastructure missions like Gati Shakti and Bharatmala are addressing these gaps, the sector needs faster execution, deeper integration with industrial corridors, and increased adoption of digital logistics platforms to improve supply chain reliability and reduce operational costs.

3. Weak Integration into High-Value Global Clusters
India’s presence in global automotive value chains is largely confined to low and mid-tier segments, such as basic castings or wiring harnesses. High-value clusters — like those producing advanced driver-assistance systems (ADAS), engine control units (ECUs), or precision gearboxes — are dominated by North America, Europe, and East Asia. India’s limited participation in these premium segments is a result of both technical capability constraints and lack of sustained international partnerships. Bridging this gap requires focused investment in design engineering, strategic FTAs, and the creation of specialized export-oriented component clusters.

4. Component Standardization and Testing Gaps
India faces a major hurdle in terms of inadequate component standardization and quality assurance infrastructure, which weakens the global credibility of its exports. Unlike markets with strong homologation systems and internationally accredited labs, Indian firms often struggle with fragmented certification processes and suboptimal testing facilities. This not only delays time-to-market but also reduces acceptability in high-regulation markets like the EU or US. Strengthening testing labs, benchmarking quality standards with global norms, and empowering industry-led quality certification initiatives will be vital to boost export performance.

Vision 2030: Driving Towards $145 Billion Component Production

1. Auto Component Production to Surge to $145 Billion
India’s automotive ecosystem is gearing up for a massive leap, targeting a production value of $145 billion in auto components by 2030. This signifies not only a push for scale but also a shift towards high-value, technologically advanced components. To achieve this, the focus will be on enhancing domestic manufacturing capabilities, increasing localization of critical parts, and driving innovation through better tooling, capital investment, and collaborative R&D. This milestone would mark India’s arrival as a serious contender in global auto manufacturing.

2. Tripling Exports to $60 Billion – From Assembler to Export Powerhouse
Currently standing at approximately $20 billion, India’s auto component exports are set to triple to $60 billion by 2030. This export surge will be driven by a sharper focus on quality, aggressive global marketing, robust supplier ecosystems, and adherence to international standards. India’s small car and utility vehicle segments are already popular overseas; expanding into premium and EV components will enhance India’s credibility as a diversified automotive export hub. This would significantly improve India’s trade balance and integrate the country more deeply into global markets.

3. Creating 3–4 Million Direct Jobs, with 2–2.5 Million New Ones
The growth in automotive production and exports will translate into substantial employment opportunities. The sector is expected to create 2 to 2.5 million new direct jobs, increasing total direct employment to 3–4 million by 2030. Beyond manufacturing, jobs will also be created in allied sectors such as R&D, design engineering, logistics, and digital automotive services. Upskilling initiatives under Skill India and SAMARTH will play a critical role in aligning workforce competencies with Industry 4.0 demands and sustaining inclusive growth.

4. Expanding GVC Participation from 3% to 8%
India currently holds a 3% share in the global automotive value chain (GVC), largely limited to low-value components. The goal for 2030 is to raise this share to 8%, positioning India as a strategic hub for global OEMs and Tier-1 suppliers. This will be achieved through better infrastructure, deeper supply chain integration, cluster-based industrial development, and a policy ecosystem that promotes competitiveness. A higher GVC share will not only boost exports but also lead to increased inward FDI and technology transfer.

5. Becoming a Net Exporter – Reducing Trade Deficits
With rising domestic production and robust export capabilities, India aims to transition from a trade deficit to a trade surplus in the automotive sector. The expected export value of $60 billion will outpace imports, allowing India to become a net exporter of auto components and EV parts. This shift will enhance the country’s macroeconomic resilience, reduce dependency on specific geographies for critical imports, and strengthen its voice in international trade negotiations.

A Fast Lane to Viksit Bharat

The Modi government’s strategic foresight, backed by policy alignment and execution agility, is shifting India’s automotive sector into high gear. With focused interventions in R&D, skilling, infrastructure, and global partnerships, India is all set to leapfrog from a cost-competitive hub to an innovation-led, export-oriented manufacturing powerhouse.

The journey from factory floors to global headlines is not just a slogan—it is becoming India’s automotive reality. With the right fuel of reforms, the right steering of policies, and the accelerator of private sector innovation, India’s auto industry is truly powering the nation’s integration into global value chains—and driving the engine of Viksit Bharat forward.