Auto parts makers pivot to automation to ride the growth wave
Global buyers’ demands on quality, speed, and traceability force a rethink of India’s factory model
Last Updated: Feb 12, 2026, 12:36 IST3 min
Prefer us on Google
Advertisement
Long known for frugality, India’s auto component makers are pivoting towards automation and data-driven manufacturing as they chase export growth and face tougher global quality standards.
Smart factories are no longer optional, said Vikrampati Singhania, president of the Automotive Component Manufacturers Association of India (ACMA), at a press conference on Wednesday. “Many companies have moved beyond experimentation. This is now about scaling and doing it in a way that makes Indian suppliers globally competitive.”
This, he said, will require shared platforms, deeper partnerships, and coordinated ecosystem development, where industry bodies like ACMA can play a catalytic role.
Singhania’s comments came at an event to release a study conducted jointly by Boston Consulting Group (BCG) and ACMA that examines how digitalisation, automation, and advanced analytics are reshaping India’s auto component manufacturing landscape.
The report—titled Bolts, Bytes and Bots: Reimagining Next-Gen Auto Component Manufacturing in India—finds that nearly two-thirds of Indian auto component manufacturers have already begun deploying “smart factory” technologies, ranging from basic machine-data capture to predictive maintenance and selective robotics.
Nearly 60 percent of companies report moderate-to-transformational benefits, including higher productivity, improved quality, better asset utilisation, and faster issue resolution.
Software on the Shop Floor
For decades, Indian auto parts factories relied on manual processes to stay flexible and cost-competitive, reserving automation for only the highest-volume production lines. That model is changing.
The industry has expanded at a 14 percent CAGR over the past five years to reach nearly $80 billion. Exports have climbed to about $23 billion in fiscal 2025, with North America and Europe accounting for roughly 60 percent of shipments. The sector is targeting exports of $100 billion by FY30, and digitisation is a step towards achieving that goal.
Global buyers are demanding tighter traceability, faster response times and near-zero defects—requirements that are difficult to meet with paper-based systems and fragmented data.
What stands out today is the structural shift, as digitalisation is no longer viewed as a discretionary investment but as a long-term lever for competitiveness, said Vinnie Mehta, director general of ACMA.
“As the industry balances export growth, coexistence of multiple powertrains and workforce challenges, smart manufacturing offers a practical pathway to improve reliability, productivity and quality using existing assets.”
Customers are also rewriting the rules. Product lifecycles are shrinking rapidly as OEMs launch new models and variants at a pace that would have seemed implausible a decade ago. For suppliers, that means producing a wider range of parts, at higher precision, with demand that can swing sharply from month to month. Dedicated lines built for a handful of parts no longer make economic sense.
“In the past, you could afford to build fixed capacity around a stable set of products,” Vikram Janakiraman, managing director and senior partner at BCG, said on the sidelines of the event. “Today, you might be supplying 50 different parts, with no certainty on volumes.”
Smart factories, in this framing, are not about futuristic automation but about using data, analytics and modular automation to stay profitable amid volatility.
BCG’s Janakiraman said digitising factories requires minimal investments -- thousands of rupees, not even lakhs — in the first stage and the returns are quick. Photo by Madhu Kapparath
From Frugality to Automation
“Earlier, frugality meant avoiding automation,” said Saurabh Chhajer, managing director and partner, BCG. “Today, frugality means using data and targeted technology to unlock productivity without massive capital spending.”
According to the report, most Indian firms are not rushing towards fully automated “dark factories.” Instead, they are starting with foundational steps—digitising manual data, building plant-wide dashboards and targeting specific pain points such as downtime, scrap and quality losses. Many of these investments deliver returns within months, said BCG’s Janakiraman.
Scaling Remains a Hurdle
While pilot projects are proliferating, the report warns that scaling them across plants remains a challenge, especially for small and mid-sized suppliers. Common hurdles include fragmented data systems, limited in-house digital expertise and resistance on the shop floor as workers fall back on familiar manual routines.
To address that gap, ACMA said it has set up a dedicated cluster programme to help MSMEs adopt smart manufacturing in stages, focusing on measurable business outcomes rather than headline technology.
“The idea is to be smart about smart manufacturing,” said ACMA president Singhania. “This is not about replacing people or building fancy factories. It’s about consistency, traceability and reliability—things global customers increasingly expect.”
Productivity, Not Pink Slips
The executives pushed back against concerns that automation will displace workers, arguing that productivity gains are essential if the industry is to meet rising demand without an unsustainable increase in headcount.
India’s auto component sector could more than double in size over the next five to six years, driven by domestic demand and exports, the report estimates. Without productivity gains, executives said, labour shortages and skill gaps could become binding constraints.
“AI is an opportunity in that sense,” said Singhania.
First Published: Feb 12, 2026, 13:17
Subscribe NowLatest News
Advertisement
Advertisement
Advertisement