New Delhi, September 3: India’s automotive component industry could free up as much as ₹39,000 crore in working capital by addressing operational inefficiencies, according to a recent study by Vector Consulting Group.
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The study estimates that around ₹98,000 crore is currently tied up in inventory across the auto component sector. Better inventory planning and consumption-based replenishment could potentially release between ₹29,000 crore and ₹39,000 crore, giving suppliers more financial flexibility.
The issue is particularly important for small and medium-sized suppliers, which are preparing for a major shift in the automotive industry. Electric vehicles, hybrid technology, hydrogen-powered vehicles and advanced electronic systems are creating new demands for investment in engineering, research, technology and skilled talent.
Operational improvements could also help suppliers make better use of existing manufacturing capacity. Reducing production changeovers, quality losses, rework and inefficient movement of materials can improve productivity without requiring an immediate expansion of physical infrastructure.
The study estimates that a 30 per cent improvement in productivity among automotive component MSMEs could support an additional ₹74,000 crore to ₹88,000 crore in annual turnover. The findings highlight the growing importance of efficient operations as India’s auto industry moves towards more technology-intensive and globally competitive manufacturing.