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

Indian real estate attracts USD 1.4 bn institutional investments in Q1 2026: Vestian

Institutional investments in India’s real estate sector touched USD 1.4 billion in Q1 2026, marking the highest first-quarter inflow since 2022, according to Vestian. While investments fell 62 per cent quarter-on-quarter due to an exceptionally high base in the previous quarter, they rose 74 per cent compared to the same period last year, reflecting sustained investor confidence despite rising geopolitical and macroeconomic challenges.Commercial real estate remained the key driver of investment activity during the quarter, accounting for 80 per cent of total inflows, sharply higher than 38 p..

Next Story
Infrastructure Transport

VECV crosses 1 lakh annual vehicle sales milestone in FY26

VE Commercial Vehicles (VECV), a joint venture between Volvo Group and Eicher Motors, has surpassed the 1 lakh annual sales mark in FY 2025–26, recording its highest-ever commercial vehicle sales performance. The company said it sold more than 100,000 vehicles during the year, marking a major milestone aligned with the original vision of the Volvo–Eicher joint venture.The strong performance was supported by demand across categories. Light and Medium Duty (LMD) trucks contributed 47,789 units, accounting for 46.1 per cent of total sales. Heavy Duty (HD) trucks recorded 26,867 units (25.9 pe..

Next Story
Technology

Rodic Digital & Advisory partners SatSure to deploy EO intelligence in public sector

Rodic Digital & Advisory (RDA), the strategic advisory and digital transformation arm of Rodic Consultants, has signed a strategic cooperation Memorandum of Understanding (MoU) with SatSure to jointly pursue opportunities in India’s public sector. The collaboration aims to integrate high-resolution Earth Observation (EO) data and geospatial AI into government workflows to strengthen monitoring, compliance, and operational decision-making across key sectors.The partnership combines SatSure’s Earth intelligence capabilities with RDA’s expertise in government digital transformation and ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement