Key Insights | Wheels of Change: Automation in India’s Automotive Sector

India’s automotive industry contributes about 7% to the national gross domestic product (GDP) and employs roughly 32 million people directly and indirectly (NITI Aayog, 2025). India’s experience is analogous to the historical experiences of industrialising nations, such as the US, Japan, and Germany, where the automotive industry has long been a central engine of growth.

Supporting this growth, the auto-component industry has become a vital segment of the economy, spanning large corporations to micro-enterprises across manufacturing clusters nationwide. It accounted for 2.3% of India’s GDP in FY2025, employed 1.5 million people, and grew roughly at 14% annually between FY2020–2025 (India Brand Equity Foundation [IBEF], n.d.).

India’s northern cluster of the automotive industry accounts for roughly half of the country’s four-wheeler production. This cluster lies along NH48, extending from Haryana (Gurugram, Manesar, Rewari, and Bawal) to Rajasthan (Bhiwadi and Alwar). Haryana’s early role in hosting the Maruti–Suzuki and Hero–Honda joint ventures (JVs) in the 1980s resulted in the growth of a dynamic auto component industry in the region. However, data from the Automotive Component Manufacturers Association [ACMA], Society of Indian Automobile Manufacturers [SIAM], and MarkLines analysed for this study show that around 80% of auto-component firms in the Delhi–Haryana cluster are Tier-2 and Tier-3 Micro, Small, and Medium Enterprises (MSMEs), while only about 20% are large Tier-1 manufacturers with deep linkages to global supply chains.

Globally, the automotive industry has been at the forefront of Industry 4.0 adoption—integrating robotics, Internet of Things (IoT) systems, advanced sensors, automated quality checks, and data-driven maintenance into production processes. India, though a subsequent entrant, now ranks among the top 10 robot-installing countries (International Federation of Robotics [IFR], 2023), with the automotive sector accounting for around 40% of all industrial robot installations in the country.