₹70,300-crore auto-component investment wave gathers pace through FY29 on EV, localisation push

Auto-component manufacturers have lined up ₹70,300 crore of projects for commissioning between FY27 and FY29, within a much larger pipeline of ₹4.76 lakh crore spread across 184 projects, Brickwork Ratings said.

Nearly 70 projects are already under implementation. The ₹70,300-crore figure covers projects scheduled to come on stream over the next three financial years, while ₹4.76 lakh crore represents the wider pipeline.

The investment cycle signals a shift from incremental capacity additions towards technology-led expansion in EVs, batteries, localisation and powertrain-agnostic components.

“India’s auto and auto ancillaries industry is transitioning from a volume-driven market to a technology-led manufacturing ecosystem,” Niraj Rathi, Senior Director–Ratings, Brickwork Ratings, said. “Policy incentives, localisation initiatives and expanding export opportunities are encouraging long-term investments despite elevated capex requirements for electrification,” he added.

The projects will support manufacturing of EV platforms, batteries and components serving both internal-combustion and electric vehicles. Automakers and Tier-I suppliers are increasing local sourcing to strengthen supply chains and reduce import dependence.

The outlook broadly converges with ICRA’s forecast that domestic OEM-linked auto-component revenues will grow 7–9 per cent in FY27. Brickwork expects revenue across the wider auto and auto-ancillaries sector to rise around 8 per cent in FY27, with revenue compounding at about 7.5 per cent.

India recorded estimated domestic vehicle sales of 30.2 million units and exports of 7.1 million units in FY26. EV penetration rose to 8.6 per cent from 0.8 per cent in FY20.

Suppliers face higher capital requirements for electrification, batteries and advanced manufacturing. Yet Brickwork and ICRA expect most organised companies to fund expansion substantially through internal accruals.

“Healthy balance sheets and strong internal accruals should enable most organised players to navigate this transition while maintaining stable credit profiles,” Rathi said.

Brickwork expects leverage to improve further, with debt servicing remaining strong despite capacity expansion.

Brickwork expects EBITDA margins to improve to around 14 per cent in FY27 from 13 per cent in FY26. ICRA is more cautious, projecting operating margins to contract by 50–100 basis points to 10.5–11.5 per cent because of tariff-related export pressure, raw-material volatility and weaker global demand.

The difference reflects separate company samples and assumptions. Both agencies expect revenue growth and investment to continue.

The industry remains exposed to US tariff uncertainty, weaker European demand, semiconductor constraints and volatile raw-material prices. Suppliers investing in batteries, electronics and EV technologies also face execution risks.

The success of the ₹70,300-crore pipeline will depend on efficient execution, productivity and disciplined leverage as the industry shifts towards electrified and software-enabled mobility.