Updated on September 16, 2025 01:18:50 PM
The continuous improvement in quality and resilient formulation in bringing new innovative technology in the auto component sector, involuntarily leading to the rise of success rate in the automobile industry. The automobile industry can’t further imagine its real success unless it prospects for certain innovative transformation in the source of producing vehicle components owing to extracting higher rate of return.
Furthermore, it organizes the growth at macro to micro level which enlarges opportunities for employment in the economy. As it has the capacity to produce large masses of auto parts and components, it also possesses over 37 million employment in the country, which results in gaining hands-on experience and expertise for assisting in manufacturing durable vehicle components by contributing 20.1% in manufacturing country’s GDP.
What Data Says?
The auto component sector in India ranked 4th largest by the production in the global manufacturer and 3rd largest ranked among by seller auto components in the world as per realization of DPIIT.
The auto components sector shares about 2.3% in India’s GDP. The FDI equity inflow in the auto components industry has registered over US$ 35.40 Bn by FY 23.
The sharply striking demand for global Original Equipment Manufacturer (OEM) has essentially reflected localization for components in the country, with the market size which stood at US$ 80.8 Bn.
The Productive Linked Incentive (PLI) Schemes underscores domestic manufacturing for advanced automotive industry products and capture investments flow into the automotive manufacturing value chain. This scheme comes to play a major role in attracting proposed investment of ₹ 67,690 cr against the target estimate of investment ₹ 42500 over 5 years. Additionally, there is no levying of excise duty on auto components which obstruct in regulating supply of goods and services between the country, provoking demand for durable goods beyond the nationwide with the value worth US$ 20.1 Bn.
Articles included nuts articles, gas compressors, components of tunnel boring machines, laminated glass used for motor vehicles, Lithium-ion battery and battery pack, windscreen wipers, defrosters, demisters, and scrap material for copper and iron.
For the participation!
To participate in FDI in the auto components sector, applicants are required to register under the Foreign Investment Facilitation Portal (FIFP). The procedure can be puzzling for any newcomer applicant since it incorporates several terms and conditions without rendering direct access to portals that can generate approvals for FDI.
Table of Content
100% FDI is allowed under the auto component sector through automatic route.
Many documents are required for FDI in poultry and dairying sectors which are as follows:
Following are the procedures which required at the time of FDI in the auto components sector:
Following are the procedures which required at the time of FDI in the auto components sector:
Applicants must fill out the online application form along with the relevant documents for making out the proposal for Foreign Direct Investment.
Filing the proposal for FDI online within two working days, DIPP then will address the concerned administrative ministry to transfer the proposal of applicants electronically
Collect all the requisite documents for continuing the process of the investment proposal. In case documents may be found incorrect, applicants will be held responsible in case of any deviation found.
The DIPP along with potential authorities will process the application internally and recognize various ministries for adding several comments such as the Ministry of Home Affairs, Reserve Bank of India, Ministry of External Affairs, Ministry Of Finances, etc.
There are conditions tapping for the procedure of FDI approval which must be understood by investors.
There are numerous significant valid reasons for investors that compel them to invest in FDI in India’s auto components sector:
Following are the benefits of auto components sectors which are listed below:
Foreign Direct Investment (FDI) in the auto component sector has provided a flexible range in a market square for choosing varieties of units with standardization as per their priority and preferences. There are various companies which come under the automotive industry to bring innovative transformation in the Indian economy. These companies also benefited with the financial aid, schemes and initiatives provided by the government to accelerate the progression line in the industry to enable and ensure those who are seeking safe and sound ventures ahead. With the continuous breakthroughs in the automobile sector, our country is not so far to record and achieve a turnover of US$ 300 Bn by 2026 with an expanding CAGR of up to 15% by the existing revenue of US$ 74 Bn.
Several other factors to consider for investors while investing in heavy industries sector are listed below:
Investors must also need to check eligibility criteria for buying investment in India in sectoral companies.
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The auto component industry is the part of automotive industry which manufactures, designs and facilitates overseas trades for the production of vehicles to run on the highways, airports, ports hub and railways.
The future prospect of auto component industry is put forward by meeting requirements of rising demand with an increasing CAGR over 15% from its current turnover of US$ 74 Bn.
The Automotive Mission Plan (AMP) 2016-2026 ranks among the top third largest missions in the world allowing engineering, production and supply of production overseas.
No, the expenditure on royalty is not covered as eligible investment under the scheme.
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