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.

Related Stories

Gold Stories

Next Story
Products

Koemmerling opens Navi Mumbai experience centre

Koemmerling, a brand of the profine Group, has expanded its presence in the Mumbai metropolitan region with the opening of a new experience centre in Navi Mumbai and launched its Allure S46 minimal sliding door system for the Indian market.Located in CBD Belapur, the facility was inaugurated by Peter Mrosik, Owner and CEO, profine Group, along with Farid Khan, Chairman and Managing Director, profine India, and Kamal Bajaj, CEO, profine India.The company said the new centre will showcase its portfolio of uPVC and aluminium window and door systems to architects, developers and homeowners.The ina..

Next Story
Products

India's waterproofing market nears Rs 150 bn milestone

India's waterproofing industry is approaching a market size of Rs 150 billion and is expected to surpass the $2 billion milestone, according to speakers at the 2nd India International Waterproofers Conference & Expo 2026 organised by the Waterproofers Association of India (WAI) in New Delhi.The two-day event brought together more than 20 speakers, 55 international delegates and 53 exhibition booths, with discussions focusing on climate-resilient construction, advanced waterproofing technologies and international collaboration.Inaugurating the event, Durga Shanker Mishra, former Secretary, ..

Next Story
Real Estate

Dilip Buildcon Q1 FY27 Revenue at Rs 23.78 billion

Dilip Buildcon Limited reported consolidated revenue from operations of Rs 2,378 crore in Q1 FY27, along with EBITDA of Rs 429 crore and profit after tax of Rs 128 crore.Consolidated EBITDA margin stood at 18.1%, improving from 17.1% in Q4 FY26. On a standalone basis, revenue from operations was Rs 1,930 crore, EBITDA stood at Rs 199 crore and PAT was Rs 39 crore, with an EBITDA margin of 10.3%.The company’s order book stood at Rs 27,691 crore as of 30 June 2026, compared with Rs 28,830 crore as of 31 March 2026. Roads and highways accounted for 17.1% of the order book, irrigation and water ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement