Updated on 22 July 2026

Auto Parts and Engineering Trends in India 2026

Industries Mohit Patel

6 Mins reading time

Auto parts and engineering trends in India

India’s Auto Parts & Engineering Trade in 2026: 6 Trends Every Distributor Should Track

What aftermarket distributors and dealers need to watch in a year of EV transition, export momentum, and aftermarket

India’s auto component industry is in the middle of a structural shift, and the H1 FY26 numbers tell the story cleanly. The sector grew 6.8% year on year to reach USD 41.2 billion in turnover. The aftermarket segment outperformed at 9% growth, reaching USD 6.1 billion in just the first half. Exports were up 9.3% to USD 12.1 billion. EVs accounted for 4.6% of total OEM supplies, which sounds small until you remember that two years ago this number was barely a rounding error. The trade is genuinely growing, and growing well.

But at the distributor level, the daily reality is uneven. Some categories are accelerating. Others are about to be disrupted by EV. Part number complexity has reached a point where the catalogue is a problem rather than an asset. Garage credit cycles have stretched in ways that nobody saw coming three years ago. So the macro is strong and the micro is messy. This piece walks through six shifts that explain the gap, and what they mean for the distributor running an aftermarket operation in 2026.

The state of India’s auto parts and engineering industry in 2026

Start with the latest ACMA data. The auto component industry turnover hit Rs 3.56 lakh crore (USD 41.2 billion) in H1 FY26 (April to September 2025), up 6.8% from the same period the previous year. Sales to OEMs grew 7.3% to Rs 3.04 lakh crore (USD 35.2 billion). The aftermarket segment, which is what most distributors are closest to, posted the stronger growth at 9% year on year, reaching Rs 53,160 crore (USD 6.1 billion) in H1 alone. The full year aftermarket figure is on track to cross USD 12 billion, with IBEF projections placing total aftermarket size at around USD 32 billion by 2026.

The export story is what changes the medium term picture for the trade. Component exports grew 9.3% to USD 12.1 billion in H1 FY26. McKinsey’s projection for ACMA places component exports at USD 100 billion by 2030, a fivefold jump from current levels. The auto component industry is also expected to attract Rs 25,000 to 30,000 crore (USD 2.89 to 3.46 billion) in FY26 investment, much of it directed at capacity expansion and EV part localization. ACMA Automechanika New Delhi 2026 drew 870 exhibitors from 20 countries showcasing more than 3,000 brands, which gives a sense of the catalogue complexity now in play.

The structural piece worth flagging is that India’s auto component industry is dominated by MSMEs at the supplier base. These are the businesses providing precision forgings, electronics sub assemblies, fasteners, and specialised parts to the larger tier 1 manufacturers and to the aftermarket. The auto sector contributes 7.1% to national GDP and 49% to manufacturing GDP.

So when the trade grows, a lot of the growth flows through the MSME base. With that backdrop, here are the six shifts to track.

Six trends shaping the auto parts and engineering trade in 2026

Trend 1: EV component localization is reshaping the supplier base

The FY26 investment commitment of USD 2.89 to 3.46 billion is heavily directed at EV part localization, up sharply from USD 1.73 to 2.31 billion in FY25. Tata Motors, Mahindra Electric, Ola Electric, Ather, TVS, JSW MG Motor, and a wave of newer entrants are building EV supplier networks from scratch. EVs now account for 4.6% of OEM supplies and that number is rising every quarter.

For aftermarket distributors, this means a new SKU stream sitting alongside the existing ICE inventory. EV components, battery management systems, battery packs, EV charging connectors, regenerative brake assemblies, all of these are showing up in the catalogue and the distributor has to decide how much to stock. The catch is that the EV aftermarket is still small. Most distributors will spend 2026 building the supplier relationships and understanding the part taxonomy. The ones who wait until EV aftermarket volume is undeniable will be behind the early movers by a year or two. This is not yet a crisis decision, but it is a decision that needs to start being made.

Trend 2: Exports are the growth engine, but mostly for OEM and tier 1

The fivefold export growth to USD 100 billion by 2030 is the headline number that gets discussed in trade journals. But for aftermarket distributors, it is worth being honest about what this number means and does not mean. The growth is concentrated in OEM and tier 1 manufacturing, not in the aftermarket distribution chain. A distributor in Karol Bagh or Rajkot is not personally exporting components. So the question is whether the export boom has any direct impact on aftermarket trade.

The honest answer is yes, indirectly. Export quality benchmarks are now shaping domestic product quality, because the same plants that supply export orders also supply the Indian aftermarket. This means cheaper unbranded inventory is losing share to branded aftermarket faster than it used to. Dealers who used to comfortably stock unbranded equivalents are finding that customers, especially garages servicing newer vehicles, increasingly insist on branded parts. The export story is, in this roundabout way, reshaping what the aftermarket distributor needs to stock.

Where India’s auto parts trade concentrates

The auto parts and engineering trade in India clusters around a few specific cities, and the cluster geography is part of how the trade operates. Knowing where the volume sits helps explain how dealer relationships and brand distribution work.

Rajkot is the auto parts capital of India, particularly for two wheeler parts, small commercial vehicle components, and a wide range of engineering hardware. The city’s engineering base, with thousands of small and medium manufacturers, has made it the natural hub for aftermarket sourcing.
Pune’s MIDC industrial belt and the surrounding areas serve OEM grade components and have a strong aftermarket presence linked to the auto OEMs concentrated in the region.
Ludhiana is the cluster for cycle parts, two wheeler components, and tractor parts.
Delhi’s Karol Bagh and Kashmere Gate together form the largest spare parts market in north India, with deep distributor presence for both ICE and increasingly EV components.
Mumbai handles a significant chunk of imported and premium aftermarket trade.
Chennai is the south India hub, anchored by Tamil Nadu’s strong automotive manufacturing base and proximity to ports.
Coimbatore, with its engineering roots, services the southern aftermarket and engineering goods trade.

Each of these clusters has its own pricing dynamics, brand preferences, and credit norms, which is why distributors operating across multiple clusters need workflows that can handle regional variation rather than imposing one operational model on all of them.

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