India’s precision machining and auto components industry is expected to maintain strong growth over the next several years as manufacturers expand beyond traditional automotive businesses into sectors such as semiconductors, defence, aerospace, electric vehicles (EVs) and data centres, according to a report by Goldman Sachs.
The global investment bank said the industry’s revenue is projected to grow at a 10 percent compound annual growth rate (CAGR) between FY26 and FY30, supported by increasing investments in advanced manufacturing, tooling and precision engineering.
According to the report, Indian auto component manufacturers are undergoing a structural shift by broadening their capabilities and catering to a wider range of high-growth industries.
“We expect the Indian auto parts industry, supported by the transition to precision machining, to grow revenue by +7%/+12%/+10% in FY27E/FY28E/FY29E (FY26E to FY30E CAGR of +10%),” the report said.
Goldman Sachs also expects the sector’s EBITDA to grow at a 15 percent CAGR during the same period.
Diversification Driving Growth
The report noted that global manufacturers across automotive, industrial and semiconductor sectors are increasingly looking to diversify their supply chains, creating new opportunities for Indian companies.
According to Goldman Sachs, the market has traditionally viewed Indian auto component companies as cyclical businesses linked mainly to the automotive sector. However, many manufacturers are now expanding into adjacent industries with stronger and more stable growth prospects.
This diversification is enabling companies to tap into larger, higher-margin markets while reducing dependence on conventional automotive demand.
Multiple Long-Term Growth Drivers
The report highlighted several structural factors expected to support industry growth over the coming years.
These include:
- Growing adoption of electric vehicles
- Rising export opportunities
- Implementation of the upcoming Eighth Pay Commission
- Global relocation of internal combustion engine (ICE) manufacturing
- Expansion into defence, aerospace, semiconductor and consumer electronics manufacturing
Goldman Sachs also pointed to India’s competitive manufacturing costs and relatively protected domestic market as factors that strengthen the country’s position in global supply chains.
Industry Revenue to Cross USD 124 Billion
According to the report, the Indian auto components industry is expected to expand from USD 85.6 billion in FY26 to USD 124.4 billion by FY30.
The brokerage believes Indian manufacturers are well positioned to benefit from increasing global demand for precision-engineered components as multinational companies continue to diversify their sourcing strategies.
With investments in advanced manufacturing capabilities gathering pace, the report said the sector is likely to play a larger role in supplying high-value components not only to the automotive industry but also to fast-growing segments such as semiconductors, defence, aerospace and data centre infrastructure.
