India’s auto and auto-ancillaries sector is projected to experience an approximately 8% increase in operating revenue during FY27, as per a report by Brickwork Ratings. This growth is attributed to a new investment cycle with projects worth Rs 703 billion set for commissioning between FY27 and FY29. The sector is bolstered by a pipeline of 184 projects valued at Rs 4.76 trillion, with 70 projects already in progress.
The investment drive is supported by schemes like Production Linked Incentive, FAME-III incentives, and ongoing capacity expansions by original equipment manufacturers and Tier-I suppliers. Brickwork Ratings anticipates a stable credit outlook for the sector throughout FY27 due to strong domestic demand, escalating exports, and prudent balance-sheet management. The report also predicts a slight improvement in EBITDA margins to around 14% in FY27 from about 13% in FY26.
Transitioning towards a technology-led manufacturing ecosystem, India’s auto and auto ancillaries industry is witnessing policy incentives, localization initiatives, and expanding export opportunities. Niraj Rathi, Senior Director – Ratings at Brickwork Ratings, highlighted that long-term investments are encouraged despite the high capital expenditure requirements for electrification. Most organized players are expected to navigate this transition successfully with healthy balance sheets and robust internal accruals, maintaining stable credit profiles.
In FY26, India saw approximately 30.2 million domestic vehicle sales and 7.1 million vehicle exports, with electric vehicle penetration surging to 8.6% from 0.8% in FY20. The country’s supplier ecosystem, comprising over 40,000 component manufacturers, is benefiting from robust SUV demand, increasing EV adoption, and enhanced export competitiveness in passenger vehicles and two-wheelers.
