NEW DELHI: Financial stress and capacity shortages among Western auto component suppliers are opening the door for Indian manufacturers to win new business from global automakers, even as tariffs raise the cost of exporting to the US.
During an analyst meet last week hosted by Mumbai-based brokerage Emkay Global, management of listed auto ancillary companies such as MM Forgings, Uniparts India and Nelcast said they are securing new orders from automakers in North America and Europe as those manufacturers widen their supplier base and look to India for additional capacity.
Indian manufacturers still retain a significant cost advantage, executives and analysts say, allowing them to compete for global orders despite tariff headwinds.
Last March, the US raised tariffs on several auto and auto parts imports from India to about 25%, from roughly 2%.
Mint reported in December that stress among European auto part makers has created opportunities for Indian component manufacturers such as Sona BLW Precision Forgings (Sona Comstar) and Samvardhana Motherson.
“Per companies’ management commentary, step-up in closure of EU foundries on labour shortage, rising energy cost, worsening financial stress is creating opportunity for Indian suppliers offering huge benefits on the inherent low manufacturing cost,” Emkay said in its 9 March note based on takeaways from management interactions.
“The trend is intensifying, as EU OEMs (original equipment manufacturers) are aggressively seeking alternative sourcing options. In North America, Indian players offer 20-30% benefit despite tariff headwinds; this helps gain share with existing clients, catering to new clients,” they added.
Chennai-based MM Forgings makes steel forgings for commercial and passenger vehicles, while Noida-based Uniparts India manufactures driveshafts and precision machine parts. Chennai-based Nelcast produces components used in powertrains, braking systems, suspensions and chassis.
The search for new suppliers also coincides with an improving demand outlook for commercial vehicles in Western markets. Major truck makers such as Volvo Trucks, Paccar and Traton have raised their volume guidance for 2026 by 3-6%.
As demand picks up, automakers facing limited capacity and financial stress among existing suppliers are redrawing supply chains and expanding their vendor base, executives said.
According to the Automotive Component Manufacturers Association of India, the country exported auto components worth $7.35 billion to North America and $6.75 billion to Europe in FY25, making the regions among the largest markets for Indian suppliers.
Supplier distress
“When we say that European suppliers are facing financial difficulties, it is not just the European plants. It will also be the US plants and other plants,” Vivek Vikram Singh, group chief executive at Sona Comstar, said during an analyst call on 23 January.
“[When] this kind of event happens, the most likely people to inherit this business or get this business resourced are, well, China and India, and for political or whatever reasons, for North America, that choice will not be China,” Singh said.
“There is a financial imperative to do so, so there is a hardcore urgency behind this,” Singh added, noting that this is not a conscious shift to India but instead to those global suppliers who already have a global track record.
Sona Comstar’s Singh commentary on the scale of the opportunity available was also alluded to by the management of Craftsman Automation during its investor call on 29 January.
“There is a lot of distress in the aluminium supplier community vendor base, especially in the auto ancillary, both in North America as well as in Europe,” Srinivasan Ravi, chairman and managing director of Craftsman Automation, told investors and analysts during the call.
“There is a lot of consolidation happening within India as well as the rest of the world in the number of supplier bases because, again, of the technological change and the new demands on the emission norms, I would say. So, we are becoming -- getting more inquiries as we speak,” he added during the call.
Executives say slower economic growth, rising costs and billions of dollars in electric-vehicle write-offs have strained Western suppliers, accelerating consolidation and pushing automakers to seek alternatives in Asia.
Capacity bet
The opportunity is emerging at a time when India’s auto component industry has expanded rapidly, with revenue rising from ₹3.49 trillion in FY20 to ₹6.73 trillion in FY25, implying a compounded annual growth rate of 14%.
Analysts say Indian manufacturers had already been expanding capacity and capabilities in anticipation of a global upcycle.
“While the end-market (commercial vehicle) has seen prolonged weakness over the past 2-3Y, Indian ancillary players have made strategic and calibrated investments in expanding capacity, building capabilities, widening the range of their product offerings, and bringing about strong cost optimizations in operations,” Chirag Jain, Nandan Pradhan, Marazbaan Dastur and Mohit Ranga of Emkay wrote in the note.
According to Anurag Singh, advisor at Primus Partners, domestic demand growth has also helped the industry build scale.
“On the innovation front we are a mixed bag. This gives us some edge in certain product lines like transmission, steering, engine components and some electronic items,” he said.
Indian suppliers are also expanding overseas as they seek to capture a larger share of global sourcing.
Tata AutoComp Systems acquired UK-based Artifex Interior Systems in March last year for ₹827 crore and later formed a joint venture in Mexico with Katcon Global. In August 2025, the company also acquired Slovakia’s IAC Group to strengthen its international business.
Minda Corp. has also built global partnerships in the past year, including for sunroofs with HCMF Taiwan, switches with Toyodenso Japan, and EV components with SANCO China.