India’s auto parts sector sees steady growth

New Delhi

India’s auto parts sector is expected to grow by 7–9% in 2025–26, says a new Crisil report. This growth is mainly driven by strong demand for two-wheelers and passenger vehicles, which together make up about half of the industry’s revenue.

Sales of commercial vehicles and tractors, which form 17% of revenue, are also likely to increase. The aftermarket segment, accounting for 15% of income, is expected to grow at 5–7%.

However, weak demand in the US and Europe, which take in about 60% of India’s auto parts exports, could be a problem. High-margin parts like advanced braking systems, infotainment, and safety tech are helping profits stay stable at around 12–12.5%.

Lower prices for materials like steel, aluminium, and plastic are also supporting profits. But the US plans to raise tariffs, which could hurt companies that export mainly to America. The US makes up 5% of total revenue but 28% of export earnings.

Most companies plan to fund their spending from their own earnings, so they won’t need to borrow much. This will help them keep strong credit ratings.

Crisil’s report is based on data from companies that earn about 35% of the sector’s total Rs 7.9 lakh crore revenue. OEMs, or vehicle manufacturers, are expected to grow 8–9%, while aftermarket sales will grow 6–7%.

Exports may rise 7–8%, but slower EV growth in the US and Europe could limit gains. Though EV models are increasing, they make up only 4% of passenger vehicle sales, so their earnings are still small. Overall, the sector’s credit outlook remains strong.