India’s auto parts industry to clock 10 pc annual growth on semiconductor, defence, EV push: Goldman Sachs

NEW DELHI: India’s precision machining and auto parts industry is expected to grow at a 10 per cent annual revenue rate between FY26 and FY30, driven by diversification into sectors such as semiconductors, defence, aerospace, electric vehicles (EVs) and data centres, according to a Goldman Sachs report.

The report said Indian auto component manufacturers are undergoing a structural transformation by expanding beyond traditional automotive supply chains into adjacent high-growth industries, supported by increasing investments in precision machining, tooling and manufacturing capabilities.

“We expect the Indian auto parts industry, supported by the transition to precision machining, to grow revenue by +7%/+12%/+10% in FY27E/FY28E/FY29E (FY26E to FY30E CAGR of +10%),” the report said. It also projected the industry’s EBITDA to grow at a 15 per cent compound annual growth rate during the same period.

According to Goldman Sachs, global initiatives by industrial, automotive and semiconductor manufacturers to diversify supply chains are creating new opportunities for Indian manufacturers. The report said the market has largely viewed these companies as cyclical auto component makers, but a number of manufacturers are now diversifying their product mix to access larger and more resilient profit pools.

The report identified electrification, exports, the upcoming Eighth Pay Commission, the global shift in internal combustion engine (ICE) manufacturing and expansion into industries such as defence, consumer electronics, semiconductors and aerospace as the key drivers supporting long-term growth. It also said India’s relatively competitive manufacturing costs and protected domestic market provide additional advantages for component makers.

Goldman Sachs expects the industry’s revenue to increase from USD 85.6 billion in FY26 to USD 124.4 billion by FY30. It added that Indian auto component makers are well placed to benefit from higher-value manufacturing opportunities as global companies increasingly seek to diversify supply chains and demand rises for precision-engineered components across multiple industries. (ANI)