Electronics could account for 45–55% of a vehicle’s cost by 2030, up from around 30–35% in 2020, as technologies such as ADAS, infotainment, sensors and connectivity become more common in both ICE and electric vehicles, according to the BCG-ACMA report Beyond Resilience.
India’s electricals and electronics segment, however, remains relatively small. It accounted for about 12% of the country’s component supply by value in FY25, according to ACMA’s annual report.
The two figures are not directly comparable. The global 45–55% estimate refers to the share of total vehicle cost, while the 12% figure represents the share of India’s component supply. India’s vehicle mix, which includes a large proportion of two-wheelers and smaller, cost-sensitive cars, also has lower electronic content than many global markets. Even so, the figures point to a sizeable opportunity for Indian suppliers to increase their presence in automotive electronics.
The opportunity is being driven by both safety and electrification. ADAS penetration in new passenger vehicles rose from less than 1% in 2021 to around 8% in 2025, helped by Bharat NCAP and growing consumer interest in vehicle safety. The shift is also creating demand for components such as multi-airbag systems, seatbelt pretensioners and restraint electronics.
At the same time, the growth of EVs is increasing demand for batteries, electric motors, power electronics and thermal management systems. EV registrations across vehicle categories rose from around 0.14 million in FY21 to about 2.5 million in FY26.
The semiconductor shortage provided an indication of the risks associated with dependence on imported electronics. By the end of 2021, around 7 lakh vehicles' worth of orders had been left unfulfilled, with the supply situation taking until mid-2023 to largely normalise. During the shortage, at least one major OEM went directly to semiconductor manufacturers after Tier-1 suppliers sourcing through traders struggled to secure chips. The OEM aggregated demand across its operations to negotiate volumes directly with chipmakers.
Government support for semiconductor and automotive manufacturing has expanded since then. The India Semiconductor Mission, launched in December 2021 with an initial outlay of about ₹76,000 crore, was followed by ISM 2.0 in 2026, with an outlay of around ₹1.27 lakh crore for areas including semiconductor fabrication, assembly and packaging. Several plants are now under development or operational, while the first India-fabricated chip is expected around the end of 2026.
Other schemes are also aimed at increasing domestic technology development. The Research, Development and Innovation scheme, launched in November 2025 with a corpus of about ₹1 lakh crore, provides long-term funding for private-sector R&D in areas including EVs and electronics.
The ₹25,938-crore Production Linked Incentive scheme for automobiles and auto components, meanwhile, provides incentives of 8–13% on incremental sales of 103 advanced automotive components, with an additional 5% for EV and hydrogen components, subject to a 50% domestic value addition requirement. Against an investment target of ₹42,500 crore, applicants had committed nearly ₹67,700 crore and invested ₹35,657 crore as of September 2025.
For component suppliers, however, building capabilities in electronics remains a challenge. Around 45% of companies surveyed do not own their product designs and operate primarily on a build-to-print or co-development basis, according to the report. This limits their ability to independently develop and scale new technology.
The shortage of people with skills in electronics, software and mechatronics is another constraint. The report notes that developing this talent base will take longer than a year, while the shift towards EVs, electronics and software is also changing the nature of investment required from suppliers. Unlike conventional manufacturing, where investments are often concentrated around tooling and production capacity, these areas require continued spending on technology and R&D.
The report therefore suggests that smaller and mid-sized suppliers should not be expected to build these capabilities entirely on their own. It recommends auto-focused technology parks with R&D facilities, along with an Automotive and Manufacturing Innovation Ecosystem linking component manufacturers with OEMs, academic institutions and start-ups.
The proposed model would involve industry bodies such as ACMA and SIAM, alongside government support, with outcomes measured through indicators such as patents and the time taken to commercialise new technologies. The report points to the pharmaceutical sector’s PRIP scheme as a possible model. The scheme has an outlay of ₹5,000 crore for FY24–30 and includes seven centres of excellence; it had received 710 research proposals by its November 2025 deadline.