India Automotive Technology Push for Global Leadership

India’s Automotive Technology Ambition Moves Beyond Manufacturing

Automotive technology in India is being urged to move beyond manufacturing technologies developed overseas and take a larger role in designing, developing and industrializing technologies domestically as the country seeks to become a global automotive technology and manufacturing hub. SIAM President Shailesh Chandra said the industry must increase investment in research and development, engineering capabilities, intellectual property and manufacturing scale as new automotive technology ecosystems emerge worldwide. Chandra, who is also Managing Director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said the large domestic market can provide the scale needed to develop technologies for both local and international customers.

“We should not aspire merely to manufacture globally developed technologies in India. We should increasingly aspire to develop technologies in India for the world,” Chandra said at the 66th annual session of ACMA. He said the changing architecture of vehicles is increasing the importance of electronics, semiconductors, sensors, power electronics, batteries, motors, software, connectivity and advanced materials. The strategic objective, he said, should be to retain a larger share of the value created by these technologies within India rather than limiting domestic participation to manufacturing after key design and development decisions have already been made elsewhere.

Industry Investment Must Follow Government Support

Government support through programs such as the PLI-Auto scheme has created a foundation for advanced automotive technologies and deeper localization, but Chandra said industry must now make the investments required to build domestic capabilities. “Government support can only create an enabling environment. The industry must take the next step by investing in R&D, engineering capabilities, intellectual property and manufacturing scale,” he said. The message places greater responsibility on automakers and suppliers to convert policy support into durable technology capabilities, stronger engineering organizations, domestic intellectual property and manufacturing capacity that can compete beyond the Indian market.

The large domestic automobile market gives component manufacturers an opportunity to develop and industrialize technologies at scale, according to Chandra. He urged component makers to look beyond conventional parts and identify technologies where India could potentially build a global position. Areas highlighted include power electronics, battery systems, electric motors, thermal management, sensors, control systems and lightweight materials. Developing these capabilities domestically would allow suppliers to participate in higher-value portions of the vehicle technology chain while using domestic production volumes to validate products, improve manufacturing economics and establish the scale needed for exports. This would also strengthen the connection between domestic demand and global technology development.

Localization Must Move Up the Value Chain

Chandra said India’s localization push must increasingly focus on high-value and technology-intensive products after progress in conventional automotive components. Recent disruptions involving critical minerals, particularly rare earths, have demonstrated how even relatively small components can expose the industry to strategic supply-chain risks. The government has started taking steps toward developing an integrated rare-earth permanent magnet ecosystem in India, but Chandra said the response cannot remain limited to a single component or raw material. “We need a comprehensive approach covering raw materials, processing, components, sub-components and final systems,” he said, emphasizing the need for broader capability across the complete technology chain.

The broader approach would require automakers and component manufacturers to work more closely on future technology requirements, supplier development and production scale. Chandra said OEMs need to provide suppliers with greater visibility on emerging requirements so domestic vendors can prepare capabilities before technologies become mainstream. Suppliers, in turn, need to develop products and processes that can achieve sufficient scale to make local manufacturing viable. This model shifts localization from a procurement exercise toward coordinated technology development, in which vehicle manufacturers and suppliers jointly build the engineering, production and supply-chain capabilities required for future vehicle architectures. “And it is important that we start now,” Chandra said.

From Import Substitution to Global Value Chains

Chandra said India’s push for self-reliance should not be confused with isolating the country from international supply chains. The objective instead should be to make India a preferred part of global automotive value chains. “We should follow a simple principle: design in India, develop in India, manufacture in India and export from India,” he said. A significant part of a product’s value is created during design and development, and Chandra said the country has an opportunity to capture more of that value by leveraging the scale of its domestic vehicle market. This approach combines domestic capability building with continued participation in global trade rather than treating self-reliance as withdrawal from international supply networks.

Indian suppliers will therefore need to compete on more than cost as global customers assess the quality, technology, innovation and delivery performance of automotive components and systems. “With the right ecosystem, India can serve both its rapidly growing domestic market and global markets seeking diversified and competitive vehicles and auto components,” Chandra said. The strategy would give suppliers a broader addressable market and reduce dependence on demand generated solely within the country. It also raises the importance of product development, process consistency, engineering depth and the ability to meet international customer requirements at competitive scale. Global competitiveness will increasingly depend on the complete value proposition rather than manufacturing cost alone.

Vehicle Market Scale Creates a Technology Opportunity

Chandra said the auto industry’s recent growth has provided the scale required to pursue this ambition. Passenger vehicle volumes reached 46.43 lakh units in FY26, while two-wheeler volumes rose nearly 11% to 2.17 crore units. Three-wheeler volumes increased nearly 13% to 8.36 lakh units, and commercial vehicle sales grew 12.6% to 10.80 lakh units, according to SIAM. The breadth of this market gives manufacturers and suppliers a large base for technology validation, industrialization and cost reduction. It also strengthens the case for developing products domestically that can subsequently be adapted for international markets, while giving component makers greater opportunities to build production scale.

The first half of FY26 had remained relatively subdued, with several segments seeing low single-digit growth and some recording declines. Growth accelerated sharply following GST 2.0, exceeding 15-20% across categories in the second half and helping major vehicle segments end the year at record volumes. Chandra said the momentum has continued into FY27, with both domestic demand and exports remaining robust. Sustained volumes matter for technology development because they provide manufacturers with opportunities to spread engineering and tooling costs across larger production runs, improve supplier economics and gather operating experience from a substantial installed vehicle base. Higher volumes can therefore support the industrialization of technologies that require significant upfront investment.

Automotive Sector’s Economic Scale Supports Global Ambition

The automobile sector contributed around ₹22.75 lakh crore to the Indian economy in FY26, accounted for about 15% of GST revenue and supported nearly 30 million direct and indirect jobs. The auto-component industry, meanwhile, reached a turnover of around ₹7.6 lakh crore in FY26, including exports of about $24 billion. “The opportunity before us is therefore much larger than just import substitution,” Chandra said. He said India should aim to become one of the world’s leading automotive manufacturing and mobility hubs while ensuring that Made in India products are associated with quality, technology, reliability and global competitiveness. The scale of the existing ecosystem provides a foundation for expanding both domestic capabilities and international market participation.

Skills Need to Catch Up With Technology

Building technology capabilities will also require a corresponding shift in workforce skills, Chandra said. The transition toward software-defined vehicles, electrification, advanced electronics, artificial intelligence and smart manufacturing will require large-scale capability building among engineers, technicians and the wider automotive workforce. He called for deeper collaboration between industry, academia and government to create a pipeline of workers equipped for emerging automotive technologies. “India’s demographic advantage can become a decisive competitive advantage if we invest in building the skills that will power the next generation of automotive innovation and manufacturing,” Chandra said. Developing these capabilities will be essential for converting investments in technology infrastructure into sustained engineering and manufacturing competitiveness.

Sustainability to Influence Global Competitiveness

Sustainability will also increasingly influence India’s ability to compete in global markets, Chandra said. International customers are looking beyond vehicle technologies and examining the broader manufacturing footprint, including energy use, carbon intensity, materials, recycling, traceability and circularity. “Sustainability will increasingly become a determinant of market access and competitiveness, particularly in export markets,” he said. For Indian suppliers and automakers, this means environmental performance can become part of product competitiveness rather than a separate compliance consideration. Companies seeking export growth may therefore need to demonstrate more transparent and resource-efficient production systems while maintaining the quality, cost and delivery performance expected by international customers.

India has an opportunity to create automotive supply chains that are not only cost competitive but also low carbon, circular and compliant with global requirements. Chandra said the sector has already demonstrated its ability to withstand disruptions and rapidly scale manufacturing when demand increases, but the next step should be to convert that resilience into global leadership. That transformation will require collaboration among vehicle manufacturers, component suppliers, government, academia, technology companies and start-ups. The objective is to build an ecosystem that can develop technology, scale production, manage strategic supply risks and meet increasingly demanding global sustainability expectations while strengthening India’s position across the international automotive value chain.

India Targets Technology-Rich Global Automotive Value Chains

Chandra said the objective should no longer be limited to building resilient supply chains for India’s domestic market. The larger ambition is to create “globally competitive, technology-rich and sustainable automotive value chains from India”. That would require domestic capabilities across design, engineering, intellectual property, components, systems integration, manufacturing and workforce development, while maintaining access to international supply chains. The approach would position India as both a major production base and a source of automotive technology for global markets. For the industry, the shift represents a move from localization of existing products toward creation of globally relevant technologies and value chains that combine scale, innovation, resilience, sustainability and international competitiveness.

Frequently Asked Questions

What is India’s automotive technology strategy?
India’s automotive technology strategy is shifting from importing and manufacturing established technologies toward developing higher-value capabilities domestically for both Indian and international markets. Chandra said the industry should invest more in research and development, engineering capabilities, intellectual property and manufacturing scale. The focus includes electronics, semiconductors, sensors, power electronics, batteries, motors, software, connectivity and advanced materials. The strategy also calls for closer collaboration between automakers and suppliers, stronger workforce skills, and supply chains that can meet global quality and sustainability requirements while retaining more technology value within India.

How can India’s vehicle market support technology development?
India’s large vehicle market can provide the scale needed to industrialize automotive technologies, strengthen suppliers and support exports from domestic production bases. Passenger vehicles, two-wheelers, three-wheelers and commercial vehicles together create substantial demand that can help manufacturers validate products and improve production economics. Chandra said suppliers should move beyond conventional components into areas such as battery systems, electric motors, thermal management, sensors, control systems and lightweight materials. He also emphasized that global competitiveness will depend on quality, innovation, delivery performance, sustainability and the ability to participate in international value chains.