The rising demand for batteries, electronics and other advanced technologies opens a new front in the localisation drive
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REUTERS/DANISH SIDDIQUI
India’s auto component industry moved from a $453 million trade surplus in FY25 to a $1.37 billion trade deficit in FY26, marking a sharp $1.82 billion turnaround. This happened because imports grew much faster than exports. Imports rose 13% to $25.4 billion, while exports increased only 5% to $24 billion. China’s share in India’s auto component imports also increased to 36% from 32%, according to a report by the Automotive Component Manufacturers Association of India (ACMA) and Boston Consulting Group (BCG).The reversal comes even as India has localised more than 70% of its automotive-component requirements and sharply reduced imports of engines, wheels and other conventional parts. India has substantially localised the mechanical automobile; its next challenge is to localise the batteries, electronics and technology increasingly going inside it.That shift is opening a new import gap. After a decade of replacing imported mechanical components with locally manufactured ones, electrification and increasingly electronics-heavy vehicles are creating demand for batteries, motors, power electronics and semiconductors—areas where India has yet to develop comparable manufacturing depth.BCG-ACMA estimates India’s roughly $86-billion auto-component industry could reach around $200 billion by FY30. The $1.37-billion deficit doesn’t erase India’s localisation gains; it shows where the next battle has moved.EV-led new component poolElectrification is creating an entirely new component pool, batteries, electric motors, power electronics and thermal-management systems that barely existed five years ago, the report say.The shift isn’t confined to EVs. Petrol and diesel vehicles increasingly incorporate sensors, electronic control units, displays, connectivity and advanced safety systems. As electronics account for more vehicle value, localisation gains in mechanical components are being tested by dependence on newer technologies.China fills the gapChina’s share of India’s auto-component imports rose four percentage points to 36% in FY26. The dependence deepens when raw materials and intermediate products are included.China controls around 90% of global rare-earth processing, while India sourced about 85% of its rare-earth magnets from China in 2025, according to BCG-ACMA. India also imports nearly all its lithium-ion cells, while battery-grade graphite processing is overwhelmingly concentrated in China.The next localisation battleThe contrast with conventional components is stark. Imports of wheels and rims plunged 74% to $60 million in FY26 from $226 million in FY19, while engine imports fell 39% to $416 million from $683 million, according to Ministry of Commerce data cited by BCG-ACMA.Those gains helped push localisation beyond 70%, from over 60% a decade ago, while component exports more than doubled from around $11 billion in FY16 to $24 billion in FY26.Published on September 2, 2026
