India's automotive sector is racing toward a software-defined future, but cultural, capability, and coordination challenges remain in its path.
09 Oct 2025 | 7731 Views | By Prerna Lidhoo & Shahkar Abidi
It’s hard to imagine that just a few years ago, the hum of a car engine was purely mechanical, a symphony of pistons, gears and fuel. Today, that sound is being rewritten in code. The modern car is no longer just a machine but a smartphone on wheels that learns, ...
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It’s hard to imagine that just a few years ago, the hum of a car engine was purely mechanical, a symphony of pistons, gears and fuel. Today, that sound is being rewritten in code. The modern car is no longer just a machine but a smartphone on wheels that learns, updates and adapts. From over-the-air updates to AI-driven diagnostics, in this age of the Software-Defined Vehicle (SDV), cars are shedding their analog past and embracing a digital, data-driven future. But as India steps into this new era, a question is: Is the industry ready?
According to market intelligence firm Markets & Data, India’s software-defined vehicle market is projected to grow at a CAGR of 16.56% from FY2026 to FY2033, expanding from USD 2.69 billion in FY2025 to USD 9.16 billion by FY2033. The opportunity is undeniable yet the journey, as every auto leader admits, is layered with challenges in culture, capability, and coordination.
From Hardware to Code
At the heart of this transformation lies a profound cultural and technological reset. “This word SDV is on all of our minds today,” says Sven Patuschka, CTO, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility. “Industry for sure is transitioning towards SDVs. As the average customer becomes younger and tech-savvy, their growing up in a digital ecosystem is the reason behind this transition.”
For Patuschka, the shift is not just about adding screens or sensors, but about reimagining what a car means to a new generation. India’s youth, aged between 25 and 35, have grown up swiping, streaming, and customising their digital experiences and they expect the same from their vehicles.
Their experiences have been shaped by UPI transactions and the 5G. “The customer looks for an experience now. Our aim is to reduce complexity as more parts are now talking to each other. How can we fulfil their expectations and merge our technology with their lifestyle? That's where SDV provides a great opportunity.”
The SDV, he explains, is where hardware meets lifestyle. Inside the cabin and in ADAS (Advanced Driver Assistance Systems) — the “first playgrounds” of SDV — the transformation is already visible. “TCU (Telematics Control Unit) is the lifeline of SDVs,” he notes. “SDV means every week you have a new car with features like OTA updates. Tomorrow there will be companies that have nothing to do with automotive delivering those experiences.”
That last line is telling. The car industry is no longer a closed ecosystem. The next wave of in-car experiences might just come from a tech startup, a content platform or even a cloud provider. The lines between auto, software, and entertainment are blurring fast.
Rethinking the Car’s Nervous System
Fritz Abraham, CTO, Varroc points out that a tremendous shift is going in the way the vehicle is envisioned and developed – from a ‘collection of ECU or electronic control units’ to a fully integrated SDV. “[Currently] all ECUs have their own functions, and we think of how they will collaborate…Then, we have next-gen vehicles that have a completely new architecture,” he points out, adding that software had always been there, but it’s just more integrated now.
The challenge, Abraham points out, isn’t merely about building connections, it’s about ensuring functional safety in a digital-first environment. “The problem now of bringing all these functions into software has one critical element: What if this function is failing? In software, unlike mechanical, you cannot make it 10 times stronger. Functional safety brings additional effort which is 10x more.”
For suppliers like Varroc, this means moving away from traditional component-centric conversations toward function-driven collaboration with OEMs. “As a supplier, we’re talking functions more than we talk components,” he says. “Now we need to work together with OEMs on functions. It’s a new world and to navigate this new world you need tools. But one critical thing is – a fool with a tool is still a fool.”
That quip hides a serious truth: SDVs need a new kind of workforce. “We need more software engineers to address the skill part of SDVs. We need system engineers who understand what the end users really want. AI accelerates the whole thing but you still need human intervention. It’s a great tool but still needs intervention.”
This is where systems thinking comes to the fore. “The complexity of an SDV is not shifting from an engineer’s table to a complete ecosystem table,” explains Kumar Prasad Telikepalli, Co-Founder & Group CTO, Matter India. “This challenge presents an opportunity for us.”
He recalls how early SDV work was organised around domains addressing comfort, convenience, safety, etc, but that’s changing fast. “Now these are shifting more towards how you realise compute power,” he says. The industry must now blend hardware, software, cybersecurity, and compute capabilities all while keeping the customer first.
“This is not a disruption at all, but a natural progression, maybe a discontinuous one,” Telikepalli says. “Your skillset of yesterday might be a baggage when you’re trying to solve this situation.”
AI, he adds, is both a catalyst and a concern. “The challenge is that new domains are being created. We need to make sure these domain experts don’t feel threatened by these conversations on AI. AI is an enabler. You’re not getting a systems architect out of AI.”
In his view, the collaboration between industry and academia will define how India shapes its SDV future. “There’s a bit of confusion on how cybersecurity and functional safety are being defined. A lot of work needs to be done with academia to redefine the skills.”
Benefiting from Data
Every SDV is a data factory on wheels streaming information about performance, usage, and environment. The key question now is: what do we do with all that data?
“Every component of the car today is capable of giving you the data,” says Vinod Bhat, Chief Digital Officer, Tata AutoComp Systems. “There’s a lot of AI insights now that are prescriptive in nature. In this data ocean, how do you stay afloat?”
Bhat warns that data privacy will be the new battleground. “Customer privacy issues, for example, are coming as guardrails for us. If a company wants to make a difference, this is the time. The value chain will be redefined. We’re talking about personalisation to hyper-personalisation. That’s the future.” For him, the era of one-size-fits-all cars is ending. “I don't need a car that's targeted to 100,000 people,” he says. “Speed, sustainability and agility will be important.”
It’s a reminder that the true potential of SDVs lies not in the tech alone, but in how that tech reshapes the relationship between car and customer. While passenger vehicles often dominate the SDV conversation, startups and commercial mobility players are quietly redefining what an SDV can be. “We’re in early stages for SDVs. We have a roadmap and a very good application potential,” says Aditya Puppalla, Co-Founder & CTO, Speedloop Auto.
But unlike carmakers racing to put bigger screens in dashboards, Speedloop is charting a different course. “Unlike cars, we would not like to bring a lot of screens to vehicles. We would instead want to focus on mobile as a primary source.” Their emphasis is on cargo analytics and ecosystem integration.
“Our focus area is cargo analytics and related marketplaces. Another focus area is doing custom modules for each and every interested party in the ecosystem like fleet operators, financiers or insurance companies,” he says. “We have to be prepared for such custom modules coming from other parties.”
This redefinition extends all the way to the drawing boards. “For far too long it’s been electro-mechanical first but now it’s about separating the hardware and the software layer,” says Rajkiran C, Senior Director - Enterprise Business, India, PTC. “How do you now define the central architecture and connect all ECUs with it to make sure they’re coordinated? It takes a fundamental redefinition of how engineering is done.”
That separation — decoupling hardware and software — is what makes the SDV model scalable and future-proof. It allows updates, upgrades, and new features without touching the physical car the way a smartphone evolves through updates.
Industry Readiness
Even as automakers are busy re-engineering cars, Indian consumers seem to have already embraced the idea. “Indian consumers are ready for Software-Defined Vehicles, and they’re digitally empowered,” says Anuraag Bharadwaj, Industry Platform Leader for Automotive – India, Capgemini. “Today’s buyers expect advanced features like remote diagnostics, predictive maintenance, adaptive cruise control, auto park, and infotainment upgrades not as luxuries, but as standard offerings.”
Bharadwaj believes this isn’t just a global trend being copied, it’s an Indian transformation in motion. “India is entering a defining phase in its automotive transformation. The shift toward SDVs is no longer experimental; it is a scaled pursuit backed by policy, technology, and market momentum.”
That “momentum” is anchored in three pillars of SDV readiness — software, regulation, and semiconductors. “Government standards like SUMS and AIS-190, aligned with UNR-156, have brought legal clarity to over-the-air (OTA) updates and post-sale software management,” he explains. “This regulatory foresight is a game-changer.”
He points to a fast-evolving ecosystem where OEMs are embedding intelligence into platforms, engineering firms powering SDV programs for global clients and India’s semiconductor mission laying the foundation for electronic self-reliance. “All major global OEMs have their GCC centres in India doing significant amounts of work in SDV development,” Bharadwaj adds. With the right partnerships, he says, India could become a global hub for affordable, scalable, software-driven mobility. “The next two years will be critical,” he cautions. “With the right partnerships and vision, India can emerge as a global hub for SDV innovation, where smart vehicles meet smart ecosystems.”
But scaling this vision will take more than optimism. Sharad Bairathi, Managing Director, Embitel Technologies said. “India is ready to scale software-defined mobility, but if we are targeting global leadership in this domain, we must industrialise SDV practices end-to-end,” he says. For Bairathi, the question isn’t “if” but “how fast”. “Why now? Because India has ambitious EV growth targets, proven success with digital public infrastructure (FASTag, UPI, connected corridors), and a robust software talent pool that create a natural runway for SDV adoption,” he adds.
He likens the SDV model to the smartphone and internet playbooks using standard APIs, rapid app innovation, microservices, containers, and CI/CD to drive agility. “What’s needed to achieve our SDV goals are 10x development velocity, lower cost, prototypes in weeks, and time-to-market in months,” he says. Bairathi outlines a five-pillar blueprint for India’s SDV journey.
The first pillar, Architecture, calls for a shift from fragmented ECUs to zonal or centralised high-performance computers (HPCs) equipped with Automotive Ethernet and robust middleware. The second, Lifecycle & OTA, focuses on cloud-to-edge orchestration, cryptographic signing, staged rollouts, and rollback capabilities to ensure seamless updates.
The third, AI & Validation, emphasises simulation-led validation tailored specifically for Indian driving conditions. The fourth, Security & Privacy, highlights the need for compliance with global standards such as WP.29 R155/R156 and India’s emerging AIS-189 and AIS-190. Finally, the fifth pillar, Policy & Partnerships, stresses the importance of aligning homologation processes with OTA and DevSecOps practices while expanding skilling programs to build a future-ready workforce.
But he also lists the constraints: connectivity gaps, road quality, affordability pressures, and policy evolution. However, he says, “India can emerge as a leader in SDV adoption through public–private collaboration, standardized SDV stacks, and localized AI/UX. Strategic focus on urban fleets, two-wheelers, last-mile logistics, and safety retrofits will be the levers of this transformation.”
Collaborations Fuel the Code
The collaboration wave is already underway. In April, KPIT Technologies announced a partnership with Mercedes-Benz Research and Development India (MBRDI) to accelerate SDV development. “Our strategy is to work closely with a select group of clients and help them address complex business challenges through cutting-edge technology,” said Kishor Patil, CEO, KPIT Technologies.
A few months later, Tata Elxsi, a long-time design and tech powerhouse, joined hands with MBRDI for Vehicle Software Engineering and SDV development, after earlier partnering with Qualcomm Technologies on virtual ECUs built on Snapdragon digital chassis solutions.
“This collaboration marks a milestone, setting the stage for further scaling and deepening our relationship,” said Manoj Raghavan, MD and CEO, Tata Elxsi. Such alliances hint at a new kind of automotive partnership model, he says, one where traditional automakers, Tier-1 suppliers, chipmakers, and software firms collaborate seamlessly to co-create digital-first mobility.
This shift, auto suppliers say, demands more than technology. It demands a new mindset, one where automakers think like software companies, suppliers think in functions, engineers think in systems, and policymakers think in ecosystems. India, with its young consumers, digital infrastructure, and software expertise, sits at the edge of an extraordinary opportunity. Yet readiness will depend on how quickly the industry can learn, unlearn, and relearn, Abraham says.