Fresh investment in critical components, material and electronics could take India’s automotive supply chain beyond assembly towards deeper, technology-led localisation, writes Niharika Singh
For years, India’s automotive localisation story has largely been about increasing the percentage of components manufactured domestically. That story, however, is beginning to change. The next phase is not simply about making more components in India it is about making the components that sit deeper within the technology. stack. The latest approvals under the government’s Electronics Components Manufacturing Scheme (ECMS) offer a strong indication of this shift. The government has approved thirty-one additional projects involving 6,844 crore of investment. Including an additional 1,033 crore investment by an already approved applicant for copper-clad laminate manufacturing, the latest round represents 7,877 crore of investment. These projects are expected to generate 82,243 crore in production and create 9,588 direct jobs.
Moving Deeper Into The Value Chain
The latest projects include manufacturing of anode materials, acetylene black conductive additives, electrolyte additives and rare-earth permanent magnets, along with several specialised electronic components. These are not simply finished electronic products. waiting to be assembled into a vehicle. They are inputs and components that form the foundation of modern automotive technologies. The broader ECMS programme now covers 106 approved projects across Thirty products and fifteen states. Cumulative approved investment has reached 69,548 crore, with projected production of 5,34,101 crore and expected direct employment of 74,628 people. The programme is also expected to generate around 2.5 lakh indirect jobs.
More importantly, the programme is beginning to translate into manufacturing activity. Thirty-eight plants have already commenced production, while another Sixteen projects are at advanced stages of construction or machinery installation. That movement from announced investment to actual manufacturing capacity is critical. Localisation only becomes meaningful when factories, suppliers, engineering teams and quality systems begin operating at scale.
Why Automotive Electronics Matter
A modern car is no longer defined only by its engine, transmission, suspension and braking systems. Sensors, electronic control units, displays, cameras, connectors, antennas, power electronics and communication systems are increasingly becoming integral to the vehicle. The shift becomes even more pronounced with electric and software defined vehicles.
EVs require technologies such as power electronics, motors, battery-management systems and sophisticated charging systems. Connected vehicles require greater electronic content, while advanced driver-assistance systems depend on cameras, sensors and processing capabilities. The ECMS approvals cover twenty target-segment products, including camera and display modules, optical transceivers, connectors, relays, transducers, filters, capacitors, coils, antennas and enclosures. For India’s automotive component manufacturers, this creates a new opportunity-but also a new competitive benchmark.
Beyond Assembly
India has already established itself as a major automotive manufacturing Iocation. The bigger question now is whether it can become a deeper technology and component manufacturing hub. A vehicle can be assembled in India while still depending heavily on imported electronic components, specialised materials or critical technologies. Increasing domestic assembly does not automatically mean deep localisation.
The real opportunity lies further upstream-in materials, sub-components, electronics, design, engineering and intellectual property. This is particularly relevant for electric mobility. Anode materials, conductive additives and electrolyte additives are important to battery manufacturing, white rare-earth permanent magnets are critical for many electric motor technologies. Developing domestic capabilities in these areas could help Indian manufacturers build greater resilience into their supply chains while reducing exposure to global disruptions.
The Import Challenge Remains
The need for deeper localisation becomes clearer when viewed against the performance of India’s broader auto-component industry. According to ACMA, India’s automotive component industry recorded its highest-ever turnover of 7.59 lakh crore ($85.9 billion) in FY 2025-26, registering 12.7% growth.
OEM supplies grew 16.3% to 6.52 lakh crore, while component exports reached $24 billion. Yet component imports stood higher at $25.4 billion. That gap tells an important story. India has built significant manufacturing strength, but it continues to depend on imports for several technologically advanced and specialised components. Closing that gap will require more than additional factories. It will require investment in R&D, engineering capabilities, advanced manufacturing, materials technology and supplier development.
The Next Localisation Test
The question, therefore, is no longer whether India can manufacture automotive components. It already can. The more important question is: Can India manufacture the technologies and critical inputs that define the next generation of vehicles?
The answer is beginning to take shape.The scale of investment under ECS, combined with the growing requirements of EVs, connected vehicles, advanced electronics and increasingly sophisticated vehicle architectures, is creating the conditions for India’s component industry to move upstream. But the journey will not be measured by investment announcements alone. The real test will be whether these projects translate into competitive products, deeper domestic supply chains, global-quality manufacturing and technologies that can be exported from India to the world. For an industry that has spent decades building its manufacturing credentials, the next chapter could be about something much bigger: moving from making more parts in India to creating more of the technology behind them.
