Automotive Electronics in India: 2030 Growth Opportunity

Automotive Electronics Is Becoming a Larger Share of Vehicle Value

Automotive electronics in India is positioned for significant expansion as electronics increasingly account for vehicle cost and functionality. Electronics could represent 45–55% of a vehicle’s cost by 2030, compared with around 30–35% in 2020, according to the BCG-ACMA report Beyond Resilience. The increase is being supported by wider adoption of advanced driver assistance systems, infotainment, sensors and connectivity across both internal-combustion and electric vehicles. For Indian suppliers, the trend creates an opportunity to move further into higher-value automotive electronics, although the country’s current contribution remains considerably smaller than the global vehicle-cost benchmark.

India’s Current Electronics Contribution Remains Relatively Small

India’s electricals and electronics segment accounted for about 12% of the country’s component supply by value in FY25, according to the Automotive Component Manufacturers Association of India annual report. This figure should not be directly compared with the global 45–55% estimate because the measures are different: the global figure represents electronics as a share of total vehicle cost, while the Indian figure represents electricals and electronics as a share of component supply. The difference also reflects India’s vehicle mix, which contains a large proportion of two-wheelers and smaller, cost-sensitive cars with lower electronic content than many global markets.

Safety and Electrification Are Expanding Electronics Demand

The opportunity for India suppliers is being driven by two major forces: vehicle safety and electrification. ADAS penetration in new passenger vehicles increased from less than 1% in 2021 to around 8% in 2025, supported by Bharat NCAP and rising consumer interest in safety. Greater adoption of these systems is increasing demand for multi-airbag systems, seatbelt pretensioners and restraint electronics, while broader vehicle electrification is creating additional requirements for batteries, electric motors, power electronics and thermal management systems across multiple vehicle categories.

EV Growth Is Increasing Demand for Electronic Components

Electric-vehicle adoption is adding another layer of demand for advanced components and electronic systems. EV registrations across vehicle categories increased from around 0.14 million in FY21 to about 2.5 million in FY26, indicating a substantial expansion of the addressable market. As electric powertrains become more widespread, suppliers are required to support technologies spanning batteries, electric motors, power electronics and thermal management. This transition also changes the investment profile of the component industry because future competitiveness increasingly depends not only on manufacturing capacity but also on electronics engineering, software capability, product development and sustained research and development.

Semiconductor Supply Risks Highlight the Need for Greater Resilience

The semiconductor shortage demonstrated the vulnerability created by dependence on imported electronics and constrained chip supply. By the end of 2021, orders equivalent to around 7 lakh vehicles had remained unfulfilled, while the supply situation took until mid-2023 to largely normalize. During the shortage, at least one major OEM went directly to semiconductor manufacturers after Tier-1 suppliers sourcing chips through traders struggled to secure adequate volumes. The OEM aggregated demand across its operations to negotiate directly with chipmakers, highlighting how semiconductor access can become a strategic issue rather than simply a conventional component procurement activity.

Government Support Is Expanding Semiconductor and Technology Capabilities

Government support has expanded since the semiconductor shortage, with initiatives aimed at building domestic manufacturing and technology capabilities. The India Semiconductor Mission, launched in December 2021 with an initial outlay of about ₹76,000 crore, was followed by ISM 2.0 in 2026, carrying an outlay of around ₹1.27 lakh crore for areas including semiconductor fabrication, assembly and packaging. Several plants are now under development or operational, while the first chip fabricated in India is expected around the end of 2026. The measures are intended to strengthen the domestic semiconductor ecosystem and reduce exposure to external supply disruptions.

R&D and Production Incentives Are Supporting Domestic Development

Additional government programs are targeting domestic technology development and automotive manufacturing. The Research, Development and Innovation scheme, launched in November 2025 with a corpus of about ₹1 lakh crore, provides long-term funding for private-sector research and development in areas including EVs and electronics. The ₹25,938-crore Production Linked Incentive scheme for automobiles and auto components provides incentives of 8–13% on incremental sales of 103 advanced automotive components, with an additional 5% available for EV and hydrogen components, subject to a 50% domestic value-addition requirement. These measures are designed to encourage investment in advanced components and technology development.

Supplier Capability Gaps Remain a Major Constraint

Despite policy support and rising demand, component suppliers face significant capability challenges in moving toward higher-value electronics. Around 45% of companies surveyed do not own their product designs and operate primarily through build-to-print or co-development arrangements, according to the report. This limits their ability to independently develop, own and scale new technologies. The challenge is particularly important as the industry moves beyond conventional manufacturing toward electronics, software and mechatronics, where competitive advantage depends increasingly on intellectual property, engineering expertise and the ability to take products from development through commercialization.

Skills and Investment Requirements Are Changing

A shortage of people with expertise in electronics, software and mechatronics adds another constraint. The report notes that developing the required talent base will take longer than a year, while the transition toward EVs, electronics and software is simultaneously changing the nature of supplier investment. Conventional manufacturing investment is often concentrated around tooling and production capacity, whereas advanced automotive technologies require continued spending on technology development and R&D. Suppliers therefore face a longer-term capability-building requirement that extends beyond adding production lines and requires sustained investment in engineering resources, product development and technical talent.

Technology Ecosystems Could Help Smaller Suppliers

The report argues that smaller and mid-sized suppliers should not be expected to develop these capabilities entirely on their own. It recommends auto-focused technology parks with R&D facilities and an Automotive and Manufacturing Innovation Ecosystem that connects component manufacturers with OEMs, academic institutions and start-ups. Such a structure could provide suppliers with access to research infrastructure, technical expertise and collaboration opportunities that may otherwise be difficult to establish independently. For India’s automotive component industry, this approach could help accelerate the development of electronics and software capabilities while supporting a broader shift toward higher-value domestic technology.

Industry Collaboration Could Accelerate Commercialization

The proposed ecosystem would involve industry bodies such as ACMA and SIAM alongside government support, with progress measured through indicators including patents and the time required to commercialize new technologies. The report identifies the pharmaceutical sector’s PRIP scheme as a possible model. PRIP has an outlay of ₹5,000 crore for FY24–30 and includes seven centers of excellence; it had received 710 research proposals by its November 2025 deadline. Applying a similar collaborative model to automotive manufacturing could help connect research with commercial requirements and give suppliers a structured pathway for developing, validating and scaling new electronic technologies.

Frequently Asked Questions

Why is automotive electronics becoming more important in India?
Automotive electronics is becoming more important as safety systems, connectivity, infotainment, sensors and electric powertrains become increasingly common across vehicles. Globally, electronics could account for 45–55% of vehicle cost by 2030, compared with around 30–35% in 2020. India’s current electricals and electronics contribution is much smaller, representing about 12% of component supply by value in FY25. The opportunity is therefore substantial, but suppliers need stronger product ownership, engineering capabilities, semiconductor access, software skills and sustained R&D investment to capture a larger share of future vehicle value.