Make in India – Making it Happen

McKinsey Automotive Components (September 2015)

India-coverOn the back of strong exports and growing domestic automotive demand, the Indian automotive components industry has roughly tripled in size from INR 83,000 crore (USD 18 billion) in 2006 to INR 235,000 crore (USD 39 billion) in 2015. Its contribution to India’s manufacturing GDP has increased to five percent.

However, India’s manufacturing sector contributes only about 13 per cent of India’s GDP, while this share is about 25 to 35 per cent for many developing nations. This presents an opportunity for the Indian automotive components industry to lead the manufacturing sector to significantly increase its contribution to India’s GDP over the next decade, helping the nation achieve its ‘Make in India’ aspirations.

For this, automotive components manufacturers in India should aspire to make not only for India but also for the world. The industry would have to focus beyond manufacturing to design and development. This would make India a global automotive components manufacturing hub. Apart from proximity to a large, growing market and significant cost advantages for manufacturers, there are significant pay-offs for the country as well in terms of forex earnings, skill development and job creation.

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