Smart factory investments can deliver 3 to 9 month payback without mass job losses, say BCG and ACMA leaders, as export clarity and domestic demand position India’s auto component sector for potential 2x growth over the next five to six years.
11 Feb 2026 | 280 Views | By Mukul Yudhveer Singh, Ketan Thakkar, Kiran Murali
Speaking at the ACMA Excellence Awards 2026, leaders from the Automotive Component Manufacturers Association of India and Boston Consulting Group said the industry’s next growth phase cannot be delivered using current operating models.
India’s auto component sector could potentially double over the next five to six years. But that ...
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Speaking at the ACMA Excellence Awards 2026, leaders from the Automotive Component Manufacturers Association of India and Boston Consulting Group said the industry’s next growth phase cannot be delivered using current operating models.
India’s auto component sector could potentially double over the next five to six years. But that growth, they cautioned, must be driven by productivity, not headcount expansion alone.
“If we try to deliver that growth with the ways of working today, there is a problem,” said Vikrampati Singhania, President of ACMA. “Where are we going to get that many people? We are not the only industry looking for talent.”
Singhania said India is positioned favourably from a geopolitical standpoint.
“When you look at India and what is happening globally, there is direction emerging,” he said. “Energy costs, preferred partnerships, domestic demand — there are many interesting things happening. There is greater clarity around exports and around the government’s intent.”
He added that, compared with earlier phases of uncertainty, the industry now has a clearer sense of opportunity.
“The Indian auto component industry has worked very hard over the years,” Singhania said. “We have invested in skilling, in new product development, and in moving slightly beyond build-to-print. Those capabilities will hold us in good stead over the next five to seven years.”
For Singhania, the issue is not automation replacing people, but enabling sustainable growth.
“The industry needs to grow significantly,” he said. “But we cannot do that by simply multiplying the number of people. Productivity has to rise in parallel.”
He cautioned against unrealistic narratives around fully automated factories.
“It is not about dark factories tomorrow morning,” Singhania said. “It is about being smart about smart manufacturing. There is value in traceability, consistency, and becoming more world-class.”
From BCG’s perspective, smart factory investments are neither abstract nor prohibitively expensive.
“This is not about putting robots everywhere,” said Vikram Janakiraman, Managing Director and Senior Partner at BCG. “These are precise investments. Can I unlock the capability of this machine? Can I use this data better? Can I create visibility so I can plan my factory better?”
Janakiraman noted that most Indian plants are already partially digital-ready.
“Ninety percent of equipment typically has some controller that captures data,” he said. “For the remaining machines, basic sensorisation is not a large investment.”
The first step, he explained, is creating a unified data backbone and visibility. From there, companies must target the operating metric that erodes the most value.
“If you are capital-constrained and need capacity, focus on OEE,” he said. “If you are in a foundry, yield is critical. Small improvements can dramatically improve margins.”
Because investments are phased and metric-linked, paybacks are often rapid.
“In many cases, we are talking about returns in three to nine months,” Janakiraman said. “These are smart, small investments that build on each other.”
While India has strong technology talent pools, integration remains a key hurdle, especially for MSMEs.
“India has data engineers, automation specialists, and analytics capability,” Janakiraman said. “The challenge is bringing all these capabilities together economically, particularly in medium and small companies. Integration capability is what needs to be built.”
That is why, he said, the transition from Level 1 to Level 5 digital maturity is gradual.
“It is not just about investing in technology,” he said. “It is about changing workflows and embedding new ways of working.”
Saurabh Chhajer, Managing Director and Partner at BCG, said adoption is already well underway.
“Two-thirds of the players we surveyed have already embarked on this journey,” Chhajer said. “They have deployed pilots or are scaling use cases across plants. A similar proportion have seen measurable impact.”
However, he stressed that scaling requires discipline.
“Companies that succeed share four traits,” Chhajer said. “Clean, integrated data backbones; strong top-down sponsorship; phased and consistent rollout; and clarity on their end-state digital architecture.”
Without those elements, organisations risk remaining stuck in pilot mode.
Singhania said the shift towards smart manufacturing is now visible across company sizes.
“A number of companies have moved beyond experimentation,” he said. “They are doing focused projects on specific lines and seeing results. This is the time to scale.”
To support smaller suppliers, ACMA has launched a dedicated smart manufacturing cluster programme.
“The key is being smart about smart manufacturing,” Singhania said. “It is about creating value and becoming even more competitive and world-class.”
As India’s auto component sector prepares for a potential doubling in scale, leaders agreed on one thing: capacity expansion alone will not be enough. Productivity, digital integration, and disciplined execution will determine whether the industry converts opportunity into sustained growth.