How India’s automotive industry is rewiring for next decade

More recent global disruptions have pointed out the necessity of supply chains that are localized and resilient even more.

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The Indian automotive sector has never been shy of changes, but the current phase is unprecedented in both magnitude and consequences. 2025 was a major turning point in the whole process of vehicle layout, production stages, and operation. The transition to e-vehicles has been accelerated, the setup of new supply chains is ready, and buyers’ preferences are changing at a rapid pace which not only makes it harder for the car manufacturers but also for the suppliers of parts to engage in the market share fight. More than two million electric vehicles (EVs) have been sold in India in 2025, reaching a sales share of 7.5 per cent total vehicle registrations. As the market for mobility moves towards electric, hybrid, and conventional technologies, the demand for precision engineered components like bearings, transmission gears, and suspension systems that provide higher standards of efficiency, reliability, and durability is also rising.The industry is undergoing three significant transformations. Technology is evolving at an unprecedented rate, and battery, e-axles, power electrics, and software-oriented vehicle systems are now moving forward together. Strategic choices made today will fix the next decade’s cost competitiveness, scale, and relevance. In addition, policies and regulations are pushing for green practices as governments impose stricter requirements on sustainability, safety, and localization, while India’s emphasis on the circular economy and energy security helps manufacturers to manage compliance and seize opportunities at the same time. On the other hand, supply chain is going through a major transformation where the mechanical value chain is being replaced by the electro-mechanical and digital architecture; in addition, the introduction of new materials, partners, and integration models is changing the way the ecosystem operates, and for the suppliers, it will be their ability to adapt rather than their size that determines their long-term success.Electrification Matures
Electric vehicle adoption in India is transitioning from early stages to mass adoption. The switch to electric power in two-wheelers, cars, and last-mile delivery fleets is happening at a fast pace. Passenger EVs are emerging as a key growth driver, with some months recording close to 80 per cent year-on-year growth in EV volumes. The component manufacturers are changing their designs and procedures to provide components that will be able to work with high speed, having good thermal stability, low NVH (Noise, Vibration and Harshness), and consistent performance; these qualities are very much needed in making electric mobility smooth, quiet, and long-lasting. More recent global disruptions have pointed out the necessity of supply chains that are localized and resilient even more. There is a gradual rise in the local production that is being supported by the Make in India program, which has classified EVs and hybrids along with high-precision components for the purpose of incentives. This localization is beneficial in the areas of quality, teamwork, and adaptability to market changes.

The total cost of ownership (TCO), long-term reliability, sustainability credentials, and technology integration are at least as important as the upfront price, especially in the urban and fleet-driven segments where the uptime has a direct impact on the business outcomes. Thus, the quality of components, energy efficiency, and durability are becoming critical to the OEM and aftermarket strategies.

Sustainability at the Core
Sustainability has become the core of automotive strategy, right from sourcing and design to end-of-life. The development of new materials, the incorporation of lower-friction designs, and the use of advanced lubrication systems will immediately result in more energy-efficient products with longer service lives. This will make environmental and business performance gains go hand in hand.

Outlook for 2026
Technology readiness, manufacturing capability, and the market adoption will be the three factors influencing India’s mobility future. Hybrid and electric powertrains are poised to surge side by side as OEMs try to have it both ways – high performance at reasonable prices. The same is true regarding the vehicles and components being more intelligent; deeper digital and sensor-enabled systems integration will be the way.

In medium-to-long term, there will be more localized production investments and hence, India’s global precision engineering hub status will be strengthened while the aftermarket continues to grow.

(Disclaimer- The author is Alagesan Thasari, Director & Head of Automotive Business, SKF India. Views are personal.)