India's Electronic Component Makers Outpaced by China on Costs
ECONOMY & POLICY

India's Electronic Component Makers Outpaced by China on Costs

The Indian auto electronic component industry faces several challenges, including low expenditure on research and development, reliance on importing components that are available locally, and a lack of manufacturing clusters. These issues have resulted in Indian manufacturers struggling with cost disadvantages compared to their Chinese counterparts. As global OEMs adopt the 'China Plus One' strategy and seek to source critical parts from outside China, India could potentially serve as a viable alternative. However, this will require addressing the significant cost disadvantages relative to China. Currently, even Vietnam offers automotive electronics parts at prices 7% lower than those in India.

India's heavy reliance on imports for local auto electronics needs is evident, with two-thirds of such parts coming from overseas markets. Consulting firm Grant Thornton has highlighted that India faces a cost disability of 7.5%?15% compared to Vietnam and China, respectively. The consultancy emphasized the benefits of manufacturing hubs, which include labor subsidies, corporate income tax reductions, interest subvention on working capital, and subsidies for machinery and equipment. Despite this, Indian component OEMs avoid the cluster approach and invest less than 3% of their revenue in R&D, compared to the 6-10% spent by global majors. Additionally, the limited linkage with homegrown IT companies for software solutions is another hindrance to the growth of India?s domestic electronic component industry.

India remains heavily dependent on China for all types of auto components, with nearly a third of total auto component imports last fiscal year coming from China. This trend has persisted for at least the last three years. In FY24, while imports amounted to Rs 1.73 lakh crore, exports reached Rs 1.75 lakh crore, marking the first time in three years that export turnover exceeded imports. Body/chassis, steering, and engine components constitute 41% of total auto component imports into India. Imports increased by 6.4% in FY24 compared to the previous fiscal year. Analysts at brokerage Motilal Oswal predict that India?s component makers will invest up to $7 billion in new capacities and technology upgrades in the future.

The Indian auto electronic component industry faces several challenges, including low expenditure on research and development, reliance on importing components that are available locally, and a lack of manufacturing clusters. These issues have resulted in Indian manufacturers struggling with cost disadvantages compared to their Chinese counterparts. As global OEMs adopt the 'China Plus One' strategy and seek to source critical parts from outside China, India could potentially serve as a viable alternative. However, this will require addressing the significant cost disadvantages relative to China. Currently, even Vietnam offers automotive electronics parts at prices 7% lower than those in India. India's heavy reliance on imports for local auto electronics needs is evident, with two-thirds of such parts coming from overseas markets. Consulting firm Grant Thornton has highlighted that India faces a cost disability of 7.5%?15% compared to Vietnam and China, respectively. The consultancy emphasized the benefits of manufacturing hubs, which include labor subsidies, corporate income tax reductions, interest subvention on working capital, and subsidies for machinery and equipment. Despite this, Indian component OEMs avoid the cluster approach and invest less than 3% of their revenue in R&D, compared to the 6-10% spent by global majors. Additionally, the limited linkage with homegrown IT companies for software solutions is another hindrance to the growth of India?s domestic electronic component industry. India remains heavily dependent on China for all types of auto components, with nearly a third of total auto component imports last fiscal year coming from China. This trend has persisted for at least the last three years. In FY24, while imports amounted to Rs 1.73 lakh crore, exports reached Rs 1.75 lakh crore, marking the first time in three years that export turnover exceeded imports. Body/chassis, steering, and engine components constitute 41% of total auto component imports into India. Imports increased by 6.4% in FY24 compared to the previous fiscal year. Analysts at brokerage Motilal Oswal predict that India?s component makers will invest up to $7 billion in new capacities and technology upgrades in the future.

Next Story
Real Estate

Integrated Waterproofing Strategies

Waterproofing buildings used to be an annual pre-monsoon affair but the evolution of real-estate development has changed that approach. In new developments, developers are weaving waterproofing solutions into both the design and construction phases, an approach that Nikhil Madan, Managing Director, Mahima Group, says, “is all about ensuring lasting durability [of the building] and keeping lifecycle risks including water seepage and extensive maintenance to a minimum.”Watertight by designAluminium formwork systems aren’t commonly thought of as a waterproofing tool but at the Mahima Group,..

Next Story
Infrastructure Urban

GROHE Showcases Water-Led Design At Milan

GROHE unveiled its GROHE SPA Aqua Sanctuary at Milan Design Week 2026, transforming Piccolo Teatro Studio Melato into an immersive showcase of water, design and wellbeing. Built on the philosophy of ‘Wellbeing Through Water’, the installation reimagined bathrooms as holistic spaces for relaxation, rejuvenation and self-care.The Aqua Sanctuary was presented through three interconnected sanctums. The first showcased the 3D-printed GROHE SPA AquaTree shower and faucet, highlighting bespoke innovation and biophilic design. The second featured the Atrio Private Collection and GROHE SPA x Buster..

Next Story
Infrastructure Transport

Rahee Group Expands Rail Manufacturing Capacity

Rahee Group has outlined a multi-year investment roadmap to expand its operational footprint and strengthen manufacturing capabilities for India’s growing railway and urban transit sector. The Group is expanding in Odisha with a new Track Component Casting Unit, for which the groundbreaking ceremony was held on 8 April 2026 in the presence of Odisha Chief Minister Mohan Charan Majhi.The Group’s flagship EPC arm, Rahee Infratech Ltd, continues to focus on complex rail infrastructure projects, including track systems, bridges, viaducts and ballastless infrastructure. Its wholly owned subsidi..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement