Precision automotive component representing India's auto component localisation and OEM sourcing opportunity

India Auto Component Localisation: What 36% China Import Share Means for OEM Sourcing

India’s automotive component industry has reached an important contradiction.

On one side, domestic manufacturing is expanding rapidly.

The Indian auto-component industry recorded ₹7.60 lakh crore (US$85.9 billion) in turnover in FY2025–26, representing 12.7% growth over the previous year. Supplies to OEMs grew even faster, rising 16.3% to ₹6.63 lakh crore.

On the other side, India’s component imports increased 13% to US$25.4 billion, while exports grew 5% to approximately US$24 billion. The result was a US$1.37 billion trade deficit in FY2025–26.

And China remained the largest source of India’s imported auto components, accounting for approximately 36% of imports.

This creates a much more interesting question than simply asking whether India’s auto-component industry is growing:

Why are imports still increasing when India’s domestic component manufacturing base is expanding?

The answer has important implications for OEMs, Tier-1 suppliers, procurement teams and Indian precision-component manufacturers.

What is India’s current auto-component localisation situation?

India has made significant progress in automotive localisation, but the supply chain is not fully localised, particularly for advanced technology and specialised components.

The current numbers make that clear.

Indicator	FY2025–26
Auto-component industry turnover	₹7.60 lakh crore
Industry growth	12.7%
OEM supplies	₹6.63 lakh crore
OEM supply growth	16.3%
Component exports	~US$24 billion
Export growth	5%
Component imports	US$25.4 billion
Import growth	13%
Trade balance	~US$1.37 billion deficit
China’s share of imports	~36%

This does not mean India is failing at localisation.

It means localisation is happening unevenly.

India is highly competitive in some component categories while remaining dependent on imports for other products.

That distinction is critical for procurement strategy.

Why are India’s auto-component imports increasing?

Imports are increasing because Indian vehicle production is growing while some specialised, advanced-technology and electronic components are still not available domestically at the required scale, cost or technology level.

The Automotive Component Manufacturers Association of India (ACMA) has pointed to several reasons for continued imports.

These include:

Specialised components not yet manufactured competitively in India
Global OEM sourcing strategies
Components supplied from established international manufacturing hubs
Cost competitiveness
Temporary domestic capacity shortages
Increasing electronic content
EV-related component requirements
High-precision technologies that still have limited domestic capacity

This is an important distinction.

An OEM does not import a component simply because India cannot manufacture it.

Sometimes the component is imported because:

the global supply chain is already established elsewhere.

That is a procurement problem—not necessarily a manufacturing-technology problem.

Why does China account for 36% of India’s auto-component imports?

China’s large share reflects its scale, established automotive supply chains, cost competitiveness and strength in electronics and specialised components.

China accounted for approximately 36% of India’s auto-component imports in FY2025–26, up from about 32% in FY2024–25 according to industry reporting based on ACMA data.

Other major import sources included:

Japan
Germany
South Korea

The issue should therefore not be reduced to:

“China is cheaper.”

The real issue is much more complex.

A global OEM may already have:

Approved Chinese suppliers
Existing tooling
Established quality systems
Long-term contracts
Validated processes
Global framework agreements
Integrated logistics
Existing mother-plant relationships

Replacing such a supplier requires more than offering a lower unit price.

Does a 36% China import share mean India is failing at Make in India?

No. The import share demonstrates that India’s manufacturing ecosystem still has gaps; it does not mean domestic manufacturing is unsuccessful.

India’s domestic auto-component industry grew 12.7% in FY2025–26, while OEM supplies increased 16.3%.

That is substantial domestic growth.

At the same time, imports increased because vehicle production and technology content are also increasing.

This creates two simultaneous trends:

Domestic manufacturing is growing

and

demand for advanced imported components is also growing.

The strategic objective should therefore be to move more high-value components into competitive Indian production—not to pursue artificial localisation of every component regardless of economics.

Which components are driving India’s localisation challenge?

Advanced electronics, EV-related components and specialised high-precision technologies are among the areas where localisation remains challenging.

Industry reporting around the FY2025–26 results specifically highlighted higher demand for advanced technology products and specialised components, including electronics and EV-related components.

The localisation challenge therefore extends beyond traditional mechanical components.

It can involve:

Power electronics
Electronic assemblies
Sensors
Advanced motor components
Battery-related components
Rare-earth-dependent systems
High-precision assemblies
Specialised materials
Advanced semiconductor-dependent systems

That is why India’s localisation strategy increasingly needs to focus on technology capability, not just manufacturing capacity.

Where is India already strong in auto components?

India has established competitive capabilities across several conventional and increasingly sophisticated automotive component categories.

ACMA’s FY2025–26 data showed strong performance in domestic OEM supplies and exports.

Indian manufacturers have developed significant capabilities in areas such as:

Engine components
Drive transmission components
Steering components
Braking systems
Forgings
Castings
Machined components
Electrical components
Body and chassis components
Precision engineering
Aftermarket components

Industry reporting indicates that engine components and drive transmission/steering systems together accounted for more than half of India’s component exports in FY2025–26.

This creates an important opportunity.

India does not need to start its localisation journey from zero.

It can build on existing manufacturing capabilities and move gradually into higher-value components.

What does the trade deficit mean for OEM procurement?

The trade deficit is a signal for procurement teams to examine which imported components could realistically be sourced from qualified Indian suppliers.

The wrong response would be:

“Replace Chinese suppliers immediately.”

The better approach is:

“Identify components where an Indian supplier can meet the same technical and commercial requirements.”

That requires a structured sourcing exercise.

Step 1: Map imported components

Identify:

Part number
Supplier country
Annual spend
Annual volume
Technology level
Criticality
Lead time
Quality history

Step 2: Classify localisation potential

Separate components into:

High localisation potential

Medium localisation potential

Low localisation potential

Step 3: Identify Indian manufacturing capability

Search for suppliers based on:

Process
Material
Tolerance
Component size
Surface treatment
Volume
Quality requirements

Step 4: Run technical qualification

Do not select suppliers based on quotation alone.

Step 5: Validate serial production

A supplier capable of making 1,000 samples is not automatically capable of producing 100,000 parts consistently.

What should OEMs consider before replacing an imported component with an Indian supplier?

OEMs should evaluate technical equivalence, process capability, quality, capacity, cost and supply-chain risk before shifting sourcing.

A practical framework is:

Qualification area	What the buyer should verify
Material	Same grade/specification?
Geometry	Can the drawing be reproduced consistently?
Tolerance	Can critical dimensions be maintained?
Surface	Can required finish/coating be achieved?
Process	Is the manufacturing route stable?
Inspection	Are critical characteristics measurable?
Capacity	Can annual demand be supported?
Quality	Can customer quality requirements be met?
Traceability	Can material and production lots be tracked?
Development	Can samples be delivered on schedule?
Cost	Is total landed cost competitive?
Logistics	Is delivery reliable?
Risk	Is there adequate backup capacity?

This is how localisation should be approached.

Not as a political slogan.

As a supplier-development process.

Can Indian suppliers compete with Chinese suppliers on price?

Sometimes, but price alone should not be the basis of a localisation decision.

A component’s real sourcing cost includes much more than the ex-factory price.

Consider:

Piece price

Tooling

Packaging

Freight

Duties

Inventory

Quality inspection

Supplier development

Rejection risk

Supply disruption risk

Total landed cost

A domestic supplier may sometimes have a higher quoted piece price but still offer a competitive total cost because of:

Shorter lead times
Lower inventory
Faster engineering response
Reduced logistics complexity
Better communication
Lower geopolitical exposure
Easier supplier development

Therefore, OEMs should compare total cost and supply risk, not simply quotation price.

What does localisation mean for precision metal component manufacturers?

Localisation creates opportunities for Indian precision manufacturers when they can replace an imported component while meeting the customer’s engineering, quality and volume requirements.

This is where the opportunity becomes highly relevant to precision metal component suppliers.

Potential categories include:

Precision turned components
Brass components
Copper components
Aluminium components
Steel components
Stainless-steel components
Pins
Bushes
Shafts
Inserts
Terminals
Connectors
Fasteners
Machined housings
Custom OEM components

The important point is that the supplier should not simply say:

“We support localisation.”

It should demonstrate:

“We can manufacture this specific component to your drawing.”

That is much more credible.

What should an Indian precision component supplier prove to an OEM?

The supplier should provide evidence of manufacturing capability rather than relying on broad claims.

An OEM or Tier-1 buyer should expect answers to questions such as:

What materials can you process?
What dimensional range can you manufacture?
What tolerances can you maintain?
What machines are available?
What inspection equipment is available?
How is traceability maintained?
What is the production capacity?
What quality documentation can be provided?
How quickly can samples be developed?
How are process changes controlled?
How is preventive maintenance managed?
What happens if demand increases?

This is especially important when the supplier is replacing an established imported source.

How can OEMs identify high-potential localisation opportunities?

The best candidates are components where Indian suppliers already possess the necessary process technology and where logistics, lead time or supply-chain diversification create additional value.

A localisation opportunity can be attractive when:

1. The component is technically manufacturable in India

There should be no major technology gap.

2. Annual volume is sufficient

Large volumes can justify tooling, process development and supplier investment.

3. Current supply risk is significant

Long lead times or concentrated sourcing can make localisation more attractive.

4. Freight represents a meaningful portion of cost

Shorter supply chains can improve economics.

5. The component is not locked into proprietary technology

Open specifications are easier to localise.

6. Indian suppliers already possess adjacent capability

This can reduce development time.

How does PLI-Auto support deeper localisation?

PLI-Auto is specifically designed to strengthen manufacturing of Advanced Automotive Technology products and deepen domestic value addition.

The Ministry of Heavy Industries says the scheme has a budgetary outlay of ₹25,938 crore and is intended to promote advanced automotive technology manufacturing and domestic and global supply chains.

As of 31 March 2026:

Investment reported: ₹44,326 crore
Incremental sales: ₹52,414 crore
Employment generated: 67,820
Incentives disbursed: ₹2,386.36 crore

The scheme also requires minimum 50% Domestic Value Addition for incentives.

The government reported that 18 applicants had received DVA certificates covering 154 products/variants as of 16 July 2026.

This is important because localisation increasingly has to be measured through actual domestic value addition, not simply the final assembly location.

Is India becoming a global automotive sourcing hub?

Yes, India’s role in global automotive sourcing is expanding, although there is still significant room to increase its share of global supply chains.

ACMA reported that FY2025–26 auto-component exports reached approximately US$24 billion, up 5%.

The United States remained the largest export destination, accounting for approximately 26% of India’s auto-component exports, while Germany and Thailand followed.

ACMA has also described global supply-chain diversification and increasing global sourcing from India as important opportunities for the sector.

This creates an interesting strategic situation:

India is simultaneously:

importing advanced components

while

exporting large volumes of components to global markets.

That means the next phase of growth is not just about producing more.

It is about producing a wider range of higher-value components domestically.

What role do International Purchase Offices play?

International Purchase Offices can help connect Indian suppliers with global OEM and Tier-1 procurement systems.

NITI Aayog’s automotive roadmap describes International Purchase Offices as procurement groups that identify, develop and manage Indian suppliers for global manufacturing plants. It noted that more than 40 OEMs and Tier-1 suppliers had such international purchase offices in India at the time of the report.

Their functions can include:

Supplier identification
Supplier development
Auditing
Capability improvement
Global tender participation
Purchase management
Risk balancing
Integration with global plants

For Indian manufacturers, this means becoming an approved supplier can potentially open markets beyond India.

For global OEMs, it provides a structured mechanism for building an Indian supply base.

What should an OEM include in a localisation RFQ?

A localisation RFQ should contain enough technical and commercial information for Indian suppliers to quote and evaluate the component accurately.

Include:

Engineering drawing
Drawing revision
Material specification
Annual quantity
Monthly volume
Batch size
Critical dimensions
Tolerances
Surface finish
Plating/coating requirements
Heat-treatment requirements
Inspection requirements
Packaging requirements
Applicable standards
Delivery location
Development timeline
SOP date
Required quality documentation

For a supplier replacing an imported component, the buyer should also provide sufficient historical quality information to establish the critical characteristics.

What does localisation mean for Premi Brasscom International?

For Premi Brasscom International, the relevant opportunity is the broader shift toward qualified Indian sourcing of precision metal components—not simply the replacement of one country with another.

Premi Brasscom International manufactures precision metal components in:

Brass
Copper
Aluminium
Steel
Stainless steel

for automotive, electrical, electronic and industrial applications.

The appropriate positioning is therefore component-specific.

For example:

Customer RFQ

↓

Drawing review

↓

Manufacturing feasibility

↓

Material and process evaluation

↓

Quotation

↓

Sample development

↓

Inspection

↓

Customer approval

↓

Serial production

This is a much stronger B2B message than simply saying:

“India can replace China.”

A procurement manager does not need another geopolitical slogan.

They need to know:

Can this supplier manufacture my component to specification, at the required volume, with acceptable quality and commercial competitiveness?

That is the question Premi Brasscom should answer.

What is the biggest mistake companies make when discussing localisation?

The biggest mistake is treating localisation as a country-selection exercise instead of a supplier-qualification exercise.

Moving sourcing from one country to another does not automatically improve:

Quality
Cost
Capacity
Technology
Delivery
Supply resilience

The correct approach is:

Part → Process → Supplier → Qualification → Serial Production

not:

Country → Supplier → Purchase

This distinction is especially important for automotive OEMs because supplier changes can affect validation, documentation, tooling and production continuity.

What should Indian component manufacturers do to capture localisation opportunities?

Indian manufacturers should build evidence-based supplier profiles around specific component capabilities instead of making broad claims about being an “OEM supplier.”

A strong supplier presentation should show:

Manufacturing

Materials
Component range
Processes
Machine capabilities

Quality

Inspection equipment
Quality systems
Traceability
Documentation

Production

Capacity
Lead time
Batch capability
Scalability

Engineering

Drawing review
Development
Process planning
Customer changes

Commercial

Export capability
Packaging
Logistics
RFQ responsiveness

This makes supplier evaluation easier for procurement teams.

Frequently Asked Questions About India Auto Component Localisation

What percentage of India’s auto-component imports come from China?

China accounted for approximately 36% of India’s auto-component imports in FY2025–26.

How much did India import in auto components in FY2026?

India imported approximately US$25.4 billion of auto components in FY2025–26, up about 13% year over year.

Did India have an auto-component trade deficit in FY2026?

Yes. India’s auto-component imports exceeded exports by approximately US$1.37 billion in FY2025–26.

How much did India’s auto-component industry grow in FY2026?

The industry recorded approximately ₹7.60 lakh crore in turnover, representing 12.7% growth.

Why does India still import automotive components?

India imports components because some specialised, advanced, electronic and EV-related products are not yet manufactured domestically at the required combination of technology, scale, cost or capacity. Global OEM sourcing strategies also influence imports.

Does China dominate all Indian automotive component sourcing?

No. China is the largest source, but Japan, Germany and South Korea are also major suppliers.

Does higher Chinese import share mean India’s localisation strategy has failed?

No. It shows that localisation remains incomplete. India’s domestic auto-component industry and OEM supplies are both growing strongly while certain advanced and specialised components remain import-dependent.

What components are difficult to localise?

Advanced electronics, EV-related components, specialised technologies and some high-precision products remain challenging areas because of technology, scale, cost and established global supply chains.

How can OEMs identify components suitable for localisation?

OEMs should identify imported components where Indian suppliers already possess the required manufacturing process, annual volume can justify development, and the total landed cost and supply-chain risk make localisation commercially attractive.

Is local sourcing always cheaper?

No. Local sourcing should be evaluated using total landed cost, quality, inventory, logistics, development and supply risk—not just piece price.

What should an OEM check before replacing an imported supplier?

The buyer should evaluate technical equivalence, material, tolerance, inspection, process capability, capacity, quality, traceability, delivery and total cost.

What is PLI-Auto?

PLI-Auto is a government scheme designed to strengthen manufacturing of Advanced Automotive Technology products and promote deeper domestic value addition and supply-chain development.

How much investment has PLI-Auto attracted?

Approved applicants reported ₹44,326 crore of investment through 31 March 2026.

What does domestic value addition mean?

Domestic value addition measures how much of a product’s value is created within India rather than being imported. PLI-Auto requires minimum 50% DVA for incentives.

Can Indian precision metal manufacturers benefit from localisation?

Yes, when their manufacturing processes, materials, quality systems and capacity match the requirements of specific automotive components.

What should a localisation RFQ contain?

It should include the drawing, revision, material, volume, tolerance, surface finish, inspection requirements, applicable standards, packaging, delivery and quality-documentation requirements.

Does localisation mean replacing every imported component?

No. Localisation should focus on components where Indian manufacturing can achieve the required technology, quality, scale and commercial competitiveness.

Can localisation reduce supply-chain risk?

Potentially. A qualified domestic source can reduce some international logistics and geopolitical exposure, but localisation does not eliminate supplier risk and still requires proper qualification and capacity management.

Conclusion

India’s automotive component industry is growing rapidly.

But the FY2025–26 numbers reveal something more important than growth alone.

The industry reached ₹7.60 lakh crore in turnover, OEM supplies rose 16.3%, and exports reached approximately US$24 billion. At the same time, imports rose 13% to US$25.4 billion, creating a US$1.37 billion trade deficit. China accounted for approximately 36% of those imports.

That is not evidence that India’s automotive manufacturing story is failing.

It is evidence that the next stage of localisation is more difficult.

The easy-to-localise components are not necessarily where the largest strategic opportunity remains.

The next opportunity is increasingly about:

Advanced technology

Precision

Electronics

EV components

Specialised materials

High-value manufacturing

Supplier capability

For OEMs and Tier-1 procurement teams, this creates a practical opportunity to review imported component portfolios and identify products that could be competitively manufactured in India.

But the objective should not be:

“Replace China.”

The objective should be:

“Build a qualified, competitive and resilient Indian supply base.”

That requires a disciplined process:

Identify the component → understand the specification → find capable Indian manufacturers → qualify the process → validate quality → confirm capacity → compare total landed cost → move to serial production.

For Indian precision manufacturers, the opportunity is equally clear.

Do not sell localisation as a slogan.

Sell manufacturing capability.

Show the customer what you can make, how you control quality, what materials you process, what production volumes you can support and how you will maintain consistency.

That is how India’s localisation ambition becomes a real automotive supply chain.

Premi Brasscom International manufactures precision metal components in brass, copper, aluminium, steel and stainless steel for automotive, electrical, electronic and industrial applications.

For OEM and Tier-1 buyers evaluating Indian precision-component sourcing, the most useful starting point is the actual engineering requirement:

Share the drawing, material specification or RFQ for manufacturing-feasibility evaluation.