GST cut, export strength to drive growth in Auto components sector

India’s auto component and bearing sector is expected to see a steady improvement in business prospects, supported by a strong order pipeline and a recovery in demand across passenger vehicles, two-wheelers and three-wheelers following the recent GST cut, according to a report by brokerage firm Centrum .

The report noted that the reduction in GST has helped ease cost pressures on vehicle purchases, leading to improved enquiries, bookings and production schedules across key automobile segments. This recovery in vehicle sales is likely to translate into higher volumes for auto original equipment manufacturers (OEMs) as well as ancillary and component suppliers.

Centrum said the bearings segment, a critical part of the auto component industry that supplies essential parts used in engines, transmissions, wheels and other vehicle systems, is particularly well-placed to benefit from the improving demand environment. Bearings play a vital role in ensuring smooth operation, efficiency and durability of automobiles, making their demand closely linked to overall vehicle production.

The Indian automobile industry enters the current year with a healthy demand outlook, supported by a strong production pipeline. Industry estimates indicate that original equipment manufacturers (OEMs) have cumulative production and order visibility of over 30 million vehicles , led by sustained demand in the passenger vehicle segment and a gradual recovery in two-wheelers and three-wheelers. Passenger vehicle production, estimated at around 4.5 million units annually , continues to anchor industry growth, while two-wheelers accounting for nearly 75 per cent of total vehicle volumes are witnessing a steady revival after a prolonged slowdown. Three-wheeler demand has also improved, aided by rising urban mobility and last-mile transport needs.

In the previous financial year, India’s auto industry reported steady growth in overall vehicle production, supported by improved consumer sentiment, easing input costs and supportive policy measures. Auto component manufacturers also posted moderate revenue growth, with exports playing a key role in offsetting uneven domestic demand during parts of the year.

The report highlighted exports as a major positive for the sector. Continued demand from overseas markets is expected to support revenue growth and capacity utilisation, even as domestic demand stabilises. High export growth has been instrumental in strengthening operating performance for leading auto component and bearing companies, helping them maintain healthier margins.

Indian component makers have increasingly gained traction in global supply chains due to competitive costs, improving quality standards and expanded manufacturing capabilities.

Centrum also pointed out that localisation initiatives are providing incremental volume support. Companies are focusing on increasing the share of locally manufactured components, reducing dependence on imports and improving supply chain resilience.

Meanwhile, companies are diversifying into non-automotive segments such as railways, wind energy and core industrial sectors to reduce dependence on cyclical auto demand and improve earnings stability. The report said better demand visibility, stronger order flows and a supportive cost environment should aid market share gains, exports and profitability. Overall, demand recovery after the GST cut, along with export momentum, localisation and diversification, places the auto component and bearings sector on a firm footing.