New Delhi, July 30 — India’s auto component industry is projected to expand at a compound annual growth rate of approximately 10 per cent through fiscal 2030, according to a report by Goldman Sachs, as manufacturers diversify into higher-margin precision-engineering segments including semiconductor equipment, defence, aerospace and data-centre power systems.

The US investment bank estimates sector revenue will rise to $124.4 billion by FY30 from $85.6 billion in FY26. Earnings before interest, taxes, depreciation and amortisation are expected to grow faster, at a 15 per cent CAGR over the same period.

Goldman Sachs said many manufacturers are adjusting their product portfolios and leveraging existing engineering capabilities as the domestic automotive sector undergoes structural change. Global efforts to diversify supply chains are directing semiconductor, automotive and industrial buyers toward India, creating openings for precision-machining firms in wafer-fabrication equipment, electric-vehicle parts, aerospace, defence and related fields.

The brokerage argued that the conventional view of these companies—as cyclical suppliers with limited pricing power and continuous capital-expenditure needs—understates the expansion of their addressable markets.

Growth between FY26 and FY30 is expected to be supported by several factors: vehicle electrification, the forthcoming Eighth Central Pay Commission, rising exports, the relocation of legacy internal-combustion-engine component production to India, and diversification into defence, consumer durables, electronics, semiconductors and aerospace. Indian manufacturers are also positioned to benefit from relatively lower labour costs, continued competitiveness in conventional ICE components and a comparatively gradual pace of domestic electrification.

Goldman Sachs anticipates that auto-component suppliers will outperform vehicle manufacturers during the next Pay Commission-driven demand cycle. “Suppliers benefit from higher production volumes across multiple original equipment manufacturers rather than depending on the success of individual vehicle models,” the report noted.

Within the end-markets tracked by the brokerage, the “others” category—covering defence, construction and energy—is forecast to expand at a 16 per cent CAGR between FY26 and FY30, making it the fastest-growing segment.

The analysis presents the auto-component sector as transitioning from a predominantly cyclical supplier base to a broader precision-engineering platform with multiple demand drivers beyond traditional automotive production.