NITI Aayog Trade Watch Quarterly (Q1 FY26): India’s Evolving Automotive Export Landscape
SDG 9: Industry, Innovation, and Infrastructure | SDG 8: Decent Work and Economic Growth | SDG 12: Responsible Consumption and Production | SDG 13: Climate Action
NITI Aayog | Ministry of Heavy Industries (MHI) | Ministry of Commerce and Industry | Ministry of Road Transport and Highways (MoRTH)
The Trade Watch Quarterly (Q1 FY26) by NITI Aayog by provides a comprehensive analysis of India’s trade performance, with a thematic focus on automotive exports. identifies the automotive sector as a critical pillar of India’s economy, supporting approximately 30 million jobs and accounting for 15% of domestic steel demand. While total trade reached $439 billion with a healthy 3.5% growth, the thematic focus reveals that India’s share in the $2.2 trillion global automotive market stands at 1.4% ($30 billion).
The report highlights a structural divergence in export performance and market integration:
Auto Components: This segment is the standout performer, with exports nearly doubling from $8.2 billion in 2015 to $16.9 billion in 2024 (7% CAGR), driven by vehicle parts, tyres, and engine components.
Segment Specialization: India holds a strong global presence in motorcycles (9% share) and tractors (1.5% share). However, it has limited participation in the high-demand passenger vehicle segment (1% share).
Intra-Industry Trade (IIT) Dynamics: For finished vehicles, IIT remains below 20%, signaling a protected market focused on domestic supply. In contrast, the auto component segment displays high IIT, reflecting India's successful integration into multi-stage global production networks.
Global Value Chain (GVC) Shift: GVC-related trade as a share of gross trade increased from 32% in 2015 to 46% in 2024, signaling a move toward fragmented, multi-stage production over purely final-goods trade.
Technological Gaps: India’s EV exports account for a negligible 0.1% of global trade, with a widening trade deficit due to heavy reliance on imported battery-manufacturing equipment and advanced technologies.
What is Intra-Industry Trade (IIT) in the automotive context? It is a metric that measures the simultaneous import and export of similar products within the same industry. For India, a high IIT in auto components indicates meaningful integration into global production networks. Conversely, low IIT and high tariffs (up to 100%) in finished vehicles suggest a protected domestic market with limited two-way model exchange compared to global leaders like Germany.
Policy Relevance
The analysis serves as a roadmap for the Automotive Mission Plan 2047, aiming to transition India into a globally competitive hub. It emphasizes that sustaining momentum requires moving beyond assembly toward high-value domestic innovation and precision manufacturing.
Strategic Impact for India:
Tax Reform: The GST rationalization of September 2025 drastically improved affordability by cutting rates for two-wheelers, small cars, and components to 18%, supporting MSME competitiveness.
Incentive Recalibration: Stakeholders recommend a mid-course review of the PLI-AUTO scheme to broaden coverage beyond EVs and ease eligibility thresholds for startups and MSMEs.
Reducing Cost Distortions: Lowering logistics costs, currently at 8% of GDP, and accelerating domestic battery manufacturing are essential to improve price competitiveness in price-sensitive emerging markets.
Trade Diplomacy: India must negotiate Mutual Recognition Agreements (MRAs) and leverage FTAs to address non-tariff barriers that currently hinder access to key destinations like Mexico and ASEAN economies.
Follow the full report here: TRADE WATCH QUARTERLY THEMATIC ANALYSIS: AUTOMOTIVE EXPORTS