MUMBAI, 21st May 2025: India’s domestic auto component manufacturers, currently experiencing growth rates of 8 to 9 percent, will need to invest approximately ₹22,000 crore for expansion driven by electric vehicles (EVs), ratings agency CRISIL has said
CRISIL estimates that auto component manufacturers need to invest ₹22,000 crore in EV production, automation, and precision manufacturing to meet the growing number of EV model launches.
CRISIL has stated that auto manufacturers will require these funds for “scaling EV capabilities, automation, and precision manufacturing — in tune with model launches that increasingly include EVs.”
However, despite accounting for only 4% of passenger vehicle (PV) sales, EV revenue contribution remains minimal, according to CRISIL analysts, resulting in muted short-term returns from this segment.
Instead, utility vehicles, which account for nearly half of auto component manufacturers’ total revenue, will be a key driver of industry growth, according to Poonam Upadhyay, Director at CRISIL Ratings.
She added that demand from automotive original equipment manufacturers (OEMs), which account for two-thirds of total revenue, is expected to increase by 8-9% this fiscal year.
As safety, emission standards, and electronic content become more important, particularly in passenger vehicles and two-wheelers, value growth is expected to outpace volume.
The aftermarket segment is expected to grow at a steady 6-7% rate, owing to an ageing vehicle fleet. However, export growth is expected to slow to 7-8% due to low demand for internal combustion engine vehicles and a slowing of EV adoption in the United States and Europe.
Commenting on the impact of the US market, which currently contributes only 5% of total revenue but accounts for a significant 28% of export earnings, Upadhyay stated that the planned 25% tariff in the US could harm companies that rely heavily on this market.
CRISIL analysts also predicted that operating margins would stabilise at 12-12.5%, thanks to an increasing share of high-margin components like Advanced Driver Assistance Systems (ADAS) modules, infotainment systems, and advanced braking technologies.
