India faces a significant challenge in its automotive sector, with a $1.4 billion auto component trade deficit recorded in FY26. This concern was voiced by Tarun Garg, MD and CEO of Hyundai Motor India, during the 66th ACMA Annual Session.
Garg emphasized that while India's auto component exports reached approximately $24 billion, imports soared to around $25.4 billion. The core issue, he explained, is not just the deficit itself, but the nature of the trade: exports are largely concentrated in mature technologies, whereas imports consist of advanced, higher-value technologies crucial for future mobility.
Building Domestic Capabilities for Future Tech
To address this imbalance and secure strategic independence, Garg asserted that it is time for India to transition from exporting conventional components to developing and exporting advanced technologies and engineering capabilities. He called for an accelerated push towards self-reliance by fostering domestic expertise in critical areas.
- Semiconductor chips
- EV battery cells
- Power electronics
- Rare-earth magnets
These components are vital as vehicles evolve from primarily mechanical systems into intelligent, connected, and software-defined mobility solutions. Customer expectations for quality, safety, reliability, and performance have also dramatically increased.
The Importance of R&D and Innovation
Garg stressed the necessity of increased investment in research and development (R&D) and innovation. Technology ownership, he noted, is fundamental for strategic independence. Stronger R&D efforts can lead to improved product architecture, materials, and manufacturing processes, enabling companies to deliver affordability without compromising on crucial aspects like quality, safety, and performance.
Reflecting on global learnings, Garg highlighted insights gained from key automotive markets:
- United States: Scale and platform thinking
- Germany: Precision engineering
- China: Supply-chain depth and speed
- Japan: Lean manufacturing and Just-in-Time systems
- South Korea: Technology with rapid execution
By integrating these global best practices with robust domestic innovation, India can leapfrog towards a more self-reliant and technologically advanced automotive component ecosystem.