India Automotive Localization Cuts Imports by Rs 20,000 Crore

India automotive localization has helped the country's vehicle industry reduce imports by more than Rs 20,000 crore, according to SIAM President Shailesh Chandra. The localization effort has been carried out jointly by SIAM members and the Automotive Component Manufacturers Association of India (ACMA) as automakers and suppliers work to strengthen domestic supply chains and reduce dependence on overseas sourcing. Chandra, who is also Managing Director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said the industry achieved a 16.6% reduction in imports in FY25 compared with the FY20 baseline. The effort has covered areas including engines, iron and steel, and is also being positioned as part of the industry's broader sustainable mobility and decarbonization strategy.

Localization Supports Domestic Supply Chain Resilience

Chandra said localization has become an important component of the Indian automotive industry's wider effort to improve supply-chain resilience while supporting sustainability and decarbonization. The industry has worked across multiple component categories with ACMA and other stakeholders to increase domestic sourcing and reduce exposure to overseas supply disruptions. Engines, iron and steel are among the areas specifically identified as part of these initiatives. Chandra described localization as an integral part of the industry's approach to sustainable mobility, linking domestic manufacturing capability with broader environmental and energy objectives. The reduction of more than Rs 20,000 crore in imports reflects the scale of the industry's progress against the FY20 baseline and comes as vehicle production, domestic sales and exports continue to expand.

Localization Part of Broader Sustainability Push

The automotive industry's sustainability agenda extends beyond domestic sourcing and includes measures covering vehicle emissions, electrification, alternative fuels, recycling and emerging clean-energy technologies. Chandra said the industry has moved to fully E20-compliant petrol vehicles, expanded electric vehicle adoption, supported CNG and LNG technologies, worked on vehicle recycling and scrappage, and begun supporting green hydrogen pilots for buses and trucks. The industry shifted to manufacturing fully E20-compliant petrol vehicles from April 1, 2025, while automakers have also started commercial launches and demonstrations of flex-fuel vehicles. The move toward higher ethanol blending is intended to support the government's effort to reduce dependence on crude-oil imports while improving India's energy security.

EV Registrations Reach 2.5 Million Units

Electrification has continued to expand alongside localization and other sustainability measures. Chandra said total EV registrations in India reached 2.5 million units in FY26, compared with 1.97 million units in FY25, representing growth of nearly 25%. He added that the share of electric vehicles in the new vehicle fleet continued to grow in double digits across most vehicle segments, including passenger vehicles, two-wheelers and three-wheelers during FY 2025-26. The PM E-Drive scheme has provided additional support for the transition. The industry's focus therefore extends from increasing domestic manufacturing and sourcing to accelerating the adoption of electric mobility across multiple vehicle categories.

Alternative Fuels and Green Hydrogen Gain Attention

Alongside electric mobility, the industry is continuing to develop alternative fuel pathways for different vehicle applications. SIAM is supporting the expansion of CNG infrastructure and LNG technology, with Chandra describing LNG as a viable solution for long-haul heavy trucks. The industry is also working with the government on pilot deployments of buses and trucks powered by green hydrogen. These initiatives reflect an approach that combines multiple propulsion and fuel technologies rather than relying on a single pathway for decarbonization. CNG and LNG infrastructure can support applications where electrification may face operational or range-related challenges, while green hydrogen pilots are being explored for heavier commercial vehicle applications as the industry evaluates longer-term low-carbon mobility solutions.

Vehicle Recycling and Scrappage Remain Priorities

Vehicle recycling is another component of the industry's sustainability program, with the sector supporting development of a recycling ecosystem and incentives designed to encourage scrappage of older, more polluting and unsafe vehicles under the government's Vehicle Scrappage Policy. Chandra said the industry is also looking to partner with the government on the recently launched Parivartan scheme, which focuses on scrapping older commercial vehicles through authorized or registered vehicle scrapping facilities in Delhi-NCR. The initiatives connect vehicle retirement with environmental and safety objectives while creating a more organized framework for end-of-life vehicle processing. For the automotive sector, recycling and scrappage are therefore being pursued alongside localization, electrification and alternative-fuel development as parts of the broader sustainability agenda.

Automotive Industry Reaches Record Sales Scale

The localization drive comes as India's automotive industry continues to expand across domestic and export markets. Passenger vehicle sales reached a record 4.6 million units in FY26, representing 7.9% growth, while exports increased 17.5% to nearly one million units. Two-wheeler domestic sales rose 10.7% to a record 21.71 million units, with exports increasing 23.4% to 5.18 million units. Three-wheeler sales grew 12.8% to around 8.4 lakh units, while exports jumped 50.1% to 4.6 lakh units. Commercial vehicle sales reached a record 10.80 lakh units, up 12.6%, and exports increased 17.4% to around 95,000 units. The scale of these markets increases the strategic importance of resilient domestic sourcing.

FY26 Vehicle Sales and Export Performance

The FY26 performance highlights the breadth of India's automotive expansion across major vehicle categories. Passenger vehicles recorded strong domestic and export growth, while two-wheelers remained the largest volume segment among the categories cited by SIAM. Three-wheelers delivered particularly strong export growth, and commercial vehicles recorded another record level of domestic sales. These results provide the operating backdrop for continued localization because higher production and sales volumes increase demand for components and supply-chain capacity. The industry's ability to reduce imports while simultaneously expanding domestic output and exports is therefore a significant element of its longer-term strategy for strengthening India's automotive manufacturing base.

Industry Contribution and Long-Term Roadmap

Chandra said the automotive sector's contribution to the Indian economy exceeded Rs 22.7 lakh crore, while the industry accounted for about 15% of the country's GST collections and supported more than 30 million direct and indirect jobs. The figures underscore the economic significance of strengthening domestic automotive capabilities as the industry expands production, exports and new mobility technologies. SIAM will continue working with the government on a long-term roadmap under the Automotive Mission Plan covering 2025 to 2047. Chandra said the plan envisions a comprehensive roadmap for the auto sector that contributes significantly to India's aspiration of becoming a Viksit Bharat by 2047. Localization is positioned within this longer-term industrial, sustainability and mobility strategy.

Frequently Asked Questions

How much have India's automotive localization efforts reduced imports?
The Indian automotive industry has reduced imports by more than Rs 20,000 crore through localization initiatives led collaboratively by SIAM members and ACMA. Chandra said this reduction represented a 16.6% decline in imports in FY25 compared with the FY20 baseline. The initiatives have covered areas including engines, iron and steel, while also supporting broader objectives related to supply-chain resilience, sustainable mobility and decarbonization. The localization program is being pursued as the industry expands domestic production, increases exports and develops new technologies across electric mobility, alternative fuels and vehicle recycling.