Commerce Minister Piyush Goyal has urged Indian auto-component manufacturers to establish manufacturing footprints in developed markets to secure critical supply chains. This strategy aims to reduce reliance on concentrated global mineral markets for EVs and semiconductors. With the auto-component sector reaching a ₹7.59 lakh crore turnover in FY26, the government is focusing on international partnerships and trade agreements to help firms scale globally.
India is actively looking to secure its supply chain for essential minerals by building stronger trade partnerships with nations including the United States, the United Kingdom, and members of the European Union. During the 66th annual session of the Automotive Component Manufacturers Association of India, Union Commerce Minister Piyush Goyal emphasized that diversifying the sourcing of minerals like lithium, cobalt, and nickel is now a priority. These materials are vital for the future of India’s growing industries, specifically electric vehicles, semiconductors, and high-end defense manufacturing.
To achieve this, the government is using trade diplomacy to mitigate risks associated with the concentration of mineral processing in a few dominant global markets. By participating in initiatives like the US-led Pax Silica and the Critical Minerals Partnership, India intends to create more resilient procurement channels. This approach is supported by nine trade agreements signed over the last five years, which now provide access to 38 developed economies with a combined GDP of approximately $60 trillion.
For investors, the most significant shift is the government's push for a change in business model for Indian companies. While India has been a strong exporter, the government is now encouraging domestic auto-component makers to establish a physical manufacturing presence in developed nations. This move is designed to bring Indian companies closer to their end customers, reduce logistics costs, and help them integrate into the global industrial infrastructure rather than relying solely on shipping finished goods from India.
The Indian auto-component industry has demonstrated strong scale, reporting a total turnover of ₹7.59 lakh crore in the last fiscal year, with exports contributing $24 billion. By moving from a pure export-led model to owning operations abroad, Indian firms are attempting to climb the value chain. This shift is meant to help companies secure higher-value contracts and become more competitive against global peers.
However, this international expansion carries specific risks that investors should monitor. Setting up manufacturing plants in developed countries often involves significantly higher operational costs, different regulatory environments, and the challenge of scaling operations to match local competition. Additionally, the success of this strategy depends heavily on the government’s ability to navigate global trade dynamics and secure favorable terms through new agreements. The reliance on imported minerals also means that any disruption in global supply lines or sudden price increases in raw materials could place pressure on the profit margins of component manufacturers.
Investors may look for specific updates from companies in this sector regarding new project announcements or overseas capacity additions. The key monitorable will be how these companies manage their debt and cash flow while funding expansion projects in new geographies. Further progress on the bilateral trade frameworks and the performance of companies that have already started international operations will be crucial in determining the success of this strategic pivot.