Union Minister H.D. Kumaraswamy has asked the auto component industry to shift from assembly to high-end design and indigenous technology. With the sector reporting a turnover of ₹7.6 lakh crore in FY26, the government is pushing for global competitiveness over simple volume growth. Investors may note that the electric two-wheeler support scheme has also received a ₹1,000 crore boost, taking the total outlay to ₹11,900 crore, even as the industry faces new cybersecurity risks.
Union Minister for Heavy Industries and Steel H.D. Kumaraswamy has called for a major change in strategy for the Indian automotive industry. Speaking at the 66th annual convention of the Automotive Component Manufacturers Association (ACMA), he emphasized that success should no longer be measured by sales volume alone. Instead, the government is pushing for companies to focus on developing their own technology and intellectual property to anchor India’s role in the global electric mobility transition.
The government's Production-Linked Incentive (PLI) scheme has been a key driver of this effort. As of June 30, 2026, companies in this space have deployed ₹45,477 crore in money spent on expansion, resulting in the creation of 67,000 new jobs. These figures reflect an industry that has effectively increased its manufacturing capacity to meet both domestic needs and export demand. Industry data for FY26 showed that the sector reached a total turnover of ₹7.6 lakh crore, with exports contributing approximately $24 billion.
Moving Toward High-Value Manufacturing
The government's strategy is to push manufacturers to move beyond simple import substitution and toward global leadership. This involves deepening local value chains rather than just assembling parts brought in from abroad. As part of this support, the government has increased the outlay for its electric two-wheeler scheme by ₹1,000 crore, raising the total fund to ₹11,900 crore. This move is aimed at building a stronger foundation for electric vehicle production within the country.
However, this modernization brings new challenges for companies and their shareholders. As the industry relies more on digital technology, security concerns are becoming more important. Cybersecurity threats to connected vehicles and manufacturing plants are now a reality. Industry leaders have highlighted the need for companies to have strong contingency plans to maintain business continuity in the event of digital breaches.
Risks and Investor Monitorables
Beyond technical challenges, the industry is also facing increased competition for talent and raw materials. As data centers and renewable energy sectors grow, they are pulling in resources that automotive companies also need. For investors, the ability of auto component manufacturers to move up the value chain will be a key factor to watch. Future earnings reports and management commentary may show how much a company is spending on research and development compared to its past spending. Investors may look for signs of companies building their own technology rather than relying on foreign licenses, as this will determine their long-term ability to compete globally.