Changes in emission, braking, vehicle alert norms to give a leg-up to auto component makers
New safety and emission norms are expected to create opportunities for India's auto parts makers. Companies such as Endurance are ramping up ABS capacity, while Uno Minda is ready with a vehicle alert system. Read why the industry is gung-ho despite exports headwinds in the US.
India's top automobile component makers expect new opportunities to win business in the domestic market as the government prepares to implement a series of rules that aim to cut down emissions of vehicles and increase safety standards.
Bosch Ltd, Tenneco Clean Air India Ltd, Endurance Technologies Ltd and Uno Minda Ltd are among the component manufacturers who have identified new opportunities stemming from expected implementation of norms in the country's automobiles business.
Over the next two years, several new regulations such as anti-lock braking systems (ABS), acoustic vehicle alerting system (AVAS), corporate average fuel emissions III (CAFE III) and tractor emission norms stage V (TREM V) are expected to be implemented which aim to enhance safety and reduce emission stemming from vehicles. The timelines for transition of the broader auto industry to Bharat Stage 7 emission norms haven't been finalized but it is also expected in a few years.
While automakers ranging from two wheeler makers to four wheeler makers are rushing to win relaxations on almost all of these new norms, auto part makers see these as new tailwinds for their business.
The changes in regulations comes at a time when Indian component makers have to deal with prospects of higher tariffs in the US market that accounts for nearly one third of total exports for the sector.
More content per vehicle
Arvind Chandrasekharan, chief executive at Tenneco Clean Air India, told Mint in an interview that the company sees new legislations will help it achieve higher content per vehicle.
“[Higher] Content per vehicle comes in two parts. One is legislation. For example, BS6 going to BS7, TREM4 going to TREM V for tractors, and CAFE norms, which will force a gasoline particulate filter in passenger vehicles," Chandrasekharan said.
The transition to BS7 norms over the next few years aims to cut down emission of nitrogen oxide and other pollutants in diesel and petrol cars while Cafe norms will put a cap on average carbon dioxide emissions of a carmakers fleet. TREM V regulations aim to improve efficiency and cut down emissions of all tractors in the country to control pollution.
Pointing to the proposed implementation of AVAS norms which will require all electric vehicles to come with sound alert system by October 2027, Sunil Bohra, chief financial officer at Uno Minda, said that the company is ready for the opportunity.
“We have already been working with our customers with this product, which has been ready for almost, I would say, three years now. And we are at the stage where we will be able to capitalize on this very fast," Bohra told analysts during a 7 November earnings call.
Not just emission norms
Bosch India managing director and chief technology officer Guruprasad Mudlapur has expressed similar sentiments about the spur in ABS demand that the government wants installed on all new two wheelers to reduce road accidents by skidding.
“In terms of capacities, we are very well prepared to handle the increased demand that's likely to come out of changes in legislation," Mudlapur said on a 11 November earnings call. Currently, ABS is mandated for bikes with more than 125cc engine capacity; such bikes account for one-sixth of the some 19 million two wheelers sold in India in fiscal 2025.
Mudlapur recalled how implementation of on-board diagnostics phase 2 norms earlier this year in two wheelers helped business. The norms required two wheeler players to have systems in vehicles which could detect and alert malfunctions leading to higher emissions.
“Two-wheeler business grew by 81.8%, mainly on account of high sale of exhaust gas sensors, resulting from implementation of OBD-2 norms starting 1st of April 2025," Mudlapur had said.
Endurance Technologies, another large manufacturer of ABS, has already said it will increase capacity by five times to win new business if new braking system norms are implemented.
On its post-earnings call on 13 November, Endurance's managing director Anurang Jain said the company has ordered a production line that can help increase ABS capacity by 1.2 million units and is ready to order a similar line depending on the government decision. Its current capacity of 640,000 will be fully utilized by the end of March 2026.
“We have a line of sight to use that line but we'll have to see what is the timeline which comes under this new guideline and the second 1.2 million line we will order based on this guideline, which we get this month," Jain had said.
Tech the edge
Industry observers say that those component makers who have invested in technology would have an edge to gain new opportunities from the implementation of new norms.
Natarajan Sankar, managing director at Boston Consulting Group noted that auto makers that have proactively invested in technology will be the ones with an advantage in the medium to long term.
“When new regulations take effect, short-term demand may face pressure as end consumers/ automakers may have to bear additional costs. However, over the medium to long term, demand will continue to grow given the significant potential of the Indian market. In this environment, auto component manufacturers that invest in the right technologies with a long-term view will be best positioned to benefit," Sankar said.
While expectations of new regulations are helping component manufacturers turn bullish on their business prospects, the reaction of market investors has been mixed.
Shares of Bosch are up 15% and Endurance’s 8% in the last six months trailing Nifty Auto’s 19% growth. On the other hand, Uno Minda’s shares have surged by 31% in the same period. Tenneco's stock was 22% higher than its issue price; it listed on 19 November.
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