Increased demand and strategic shifts by global corporations are acting as growth factors for the sector. The home-grown automobile sector is also relying on this new-age trade practice as it allows companies to reduce capital expenditure on infrastructure, equipment and labour. 

Different industries within India have found a fondness towards contract manufacturing owing to several factors. The sector is experiencing significant growth driven by increased demand and strategic shifts by global corporations.

Policies like ‘Make in India’ act as a catalyst for the growth by offering incentives to boost domestic manufacturing. The Central Government has also introduced measures to attract foreign investment in electric vehicle (EV) manufacturing, aiming to establish India as a hub for EV production.

The home-grown automotive sector is also seen relying more on this new-age trade practice. From commercial to passenger vehicles, contract manufacturing allows automakers to reduce capital expenditure on infrastructure, equipment and labour. Instead of investing heavily in setting up factories, companies can focus on product development, marketing and other areas while leveraging third-party manufacturers.

Speaking to Motoring Trends, Layam Group Chairman G S Ramesh said, “The automobile industry encompasses plenty of activities including assemblies, subassembly etc. Currently, there is a shortage of labour within the industry. Contract manufacturing is picking pace as it helps companies to offload certain responsibilities without compromising on quality standards.”

“Companies involved in contract manufacturing take full responsibility of the products and are extremely cautious about quality and skill aspects. They produce the products in tandem with set quality standards and get paid in return,” he added.

Companies involved in this model also cut back on employee costs as contractors hire their own workforce and are responsible for their career progression.

Layam Group is involved in automobile, smartphone and other sectors for contract manufacturing. It reported an INR 3-4 billion turnover with 70 percent revenue coming from the automobile and engineering sectors.

Commenting on the same, Ramesh explained, “We have been involved in the space for the past few years. We have undertaken two kinds of models. One is contract manufacturing, and the other is job contract model. In the job contract model, we assume the role of a third-party quality inspector of the contract issuer’s product line.”

Alluding to vehicle segments the company manufactures under contracts, he noted, “We are involved in the commercial vehicle segment, where we produce the body frame for Tata Motors’ buses. We produce electric buses too and are also involved in logistics, shell making, final panelling etc. The manufacturing unit is in Dharwad and Lucknow.”

Commenting on market opportunities, the executive noted, “India’s contract manufacturing sector presents a compelling growth story, driven by rising demand for trusted partners among OEMs and smaller manufacturers alike. The opportunity lies in how effectively firms can position themselves as reliable collaborators. Clients are increasingly open to outsourcing, provided they find dependable service providers, creating a strong business case for contract manufacturers.”

“Small and medium enterprises are also showing interest in contract manufacturing, seeking to integrate themselves into broader supply chains. This trend signals a growing ecosystem where even niche players can secure a foothold,” he added.

However, the key challenge remains a mindset shift. Traditional industry players often resist adopting technology-driven solutions, preferring conventional methods. Yet, once convinced, they integrate seamlessly, underscoring the importance of strategic engagement. The availability of skilled resources is less of a bottleneck, given the emergence of hire-train-deploy models that ensure workforce readiness.

“In an increasingly competitive landscape, transparency and trust emerge as the defining factors for success. Companies that establish credibility and deliver on performance expectations will secure long-term partnerships and growth,” said Ramesh.

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EKA Mobility, a leading Indian electric commercial vehicle manufacturer, has announced the rollout of its 1,000th small commercial vehicle (SCV) from its manufacturing facility in Chakan, Pune.

Backed by global and domestic investors – including VDL Groep (Netherlands), Mitsui & Co. (Japan), NIIF India-Japan Fund, and Enam Holdings – the company operates as a Champion OEM under the Government of India's Auto PLI Scheme.

To mark the milestone, EKA Mobility organised two high-profile vehicle handovers highlighting local community integration and international diplomatic ties:

• Local Delivery: The 1,000th vehicle, an EKA 6S, was officially presented to the Dagdusheth Halwai Ganpati Trust, one of Pune’s prominent charitable institutions. The EKA 6S is India's first steering-wheel passenger electric three-wheeler featuring a driver plus six-seater capacity configuration. The trust will deploy the EV within its community service and humanitarian operations.
• International Diplomatic Delivery: The company handed over an EKA 3S electric three-wheeler to Marisa Gerards, the Ambassador of the Kingdom of the Netherlands to India. The handover highlights EKA's bilateral connection with the Netherlands, which is home to its strategic engineering and industrial partner, VDL Groep.

The Chakan plant serves as EKA Mobility's primary industrial hub for SCV and truck production. It currently has an installed production capacity of 24,000 commercial vehicles per year. The site employs more than 1,000 people and features an on-site research and development centre staffed by over 400 engineers and designers.

Under its EvolutioNARI initiative, EKA Mobility has established an all-women-led assembly line specifically dedicated to its SCV production, focusing on diversity within the automotive manufacturing sector.

Furthermore, EKA Mobility is currently the only domestic OEM offering a full-stack commercial EV portfolio spanning three-wheelers, SCVs, buses and trucks. The company's assembly footprint is scaling across three distinct locations – Chakan, Pune, plant has an annual capacity to manufacture 24,000 SCVs and trucks. Koregaon, Pune, can manufacture 15,000 e-buses and upcoming Pithampur plant in Madhya Pradesh, which will have a combined manufacturing capacity of 4,000 buses.

Dr. Sudhir Mehta, Founder & Chairman, EKA Mobility, said, “The 1,000th SCV rolling off our Chakan facility is not merely a production number; it is proof of what Indian engineering, innovation, and determination can achieve. It reflects years of perseverance and a shared belief that India can emerge as a global leader in sustainable mobility through world-class products designed and manufactured at home. As we celebrate this achievement on World Environment Day, we are reminded that our purpose extends beyond manufacturing vehicles. We are building solutions that help businesses operate more sustainably, reduce environmental impact, improve everyday mobility, and contribute to a cleaner future for generations to come.”

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Servotech Renewable Power System has signed a Memorandum of Understanding (MoU) with the Haryana Enterprises Promotion Centre (HEPC), Department of Industries & Commerce, Government of Haryana. The agreement outlines a proposed investment of approximately INR 4 billion to expand its manufacturing and warehousing operations within the state.

The proposed CAPEX will be deployed in a phased manner over the next 24 to 36 months. The expansion targets several clean-technology and power segments that have been identified as core thrust areas under the state's new industrial policy.

The investment will scale Servotech's manufacturing capacity across electric vehicle (EV) chargers, solar products, battery packs, Battery Energy Storage Systems (BESS) and power electronics.

While the company is currently evaluating specific site locations within Haryana, the capacity expansion is intended to scale overall production volumes, improve operational efficiencies, deepen import substitution, and support growing domestic and export market demand. Under the terms of the MoU, the Haryana Government, via the HEPC, will provide single-window facilitation support and ease-of-doing-business assistance to streamline project implementation.

The project is projected to generate around 500 direct and indirect employment opportunities, contributing to Haryana's industrial and economic growth.

The MoU was finalised in the presence of the Chief Minister of Haryana, Nayab Singh Saini, during the official launch of the ‘Make in Haryana’ Industrial Policy 2026 in Gurugram on 1 June 2026. The event also introduced a compendium of nine separate sectoral policies designed to attract industrial and clean-energy investments to the state.

Raman Bhatia, MD, Servotech Renewable Power System, said, “We are delighted to partner with the Government of Haryana. Haryana has emerged as one of India’s most progressive investment destinations, and the launch of the Make in Haryana Industrial Policy 2026 reinforces the state’s commitment to industrial growth, clean-energy manufacturing and innovation. Our proposed INR 4 billion investment aligns with Servotech’s long-term vision of scaling renewable energy manufacturing capabilities and is a meaningful step towards our stated ambition of reaching INR 15 billion in revenue by FY2027. We believe this collaboration will strengthen our operational footprint and contribute to Haryana’s clean-energy ambitions and broader economic development.”

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It was in February 2024, Vietnam-based VinFast announced its plans to build an integrated electric vehicle manufacturing facility in Tamil Nadu, India. The facility spread across 400 acres would see an initial investment of USD 500 million over five years with a projected capacity to manufacture 150,000 vehicles annually. 

In August 2025, the company officially inaugurated its facility, which made the Tamil Nadu plant its third operational plant and the fifth project in its global manufacturing network.

And now in a matter of 10-months, the Vietnamese automaker has rolled out its 10,000^th made-in-India vehicle from its Tamil Nadu facility. The milestone was reached less than one year following the official inauguration of the manufacturing facility.

At present, the automaker has introduced three models for the Indian market – VF 6, VF 7 and VF MPV 7. It is also looking to introduce electric scooters and electric buses in India this year.

According to the company, the achievement highlights its team's capability and its ongoing commitment to developing sustainable mobility infrastructure within the Indian automotive market.

VinFast states that with the Tamil Nadu plant on stream, it is now moving closer to its sales target of 200,000 vehicles and its long-term production goal of 1 million vehicles per year by 2030.

Also read: Pham Nhat Quan Anh Succeeds Le Thi Thu Thuy As Chairman Of VinFast Auto

Amit Arora Joins VinFast India As Director O2O Sales

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JSW MG Motor India has started production of the MG Majestor, its D+ segment sport utility vehicle (SUV), at its manufacturing facility in Halol, Gujarat.

The SUV features a four-wheel-drive (4WD) system and triple differential locks to manage traction and control across terrain conditions. It is powered by a 2.0-litre twin-turbo diesel engine paired with an electronic drivetrain and includes advanced driver assistance systems (ADAS) for vehicle safety and control.

Pre-reservations for the vehicle have opened at a price of INR 41,000 on the company's website, with early customers receiving priority delivery timelines and vehicle previews.

The Halol assembly plant utilises automated manufacturing processes and quality control systems to handle the assembly of the vehicle's chassis, body panel alignment and mechanical components.

To support the vehicle rollout, the carmaker is introducing its ownership programme, which includes a 5-year unlimited-kilometre warranty package, 5-year roadside assistance service contract and 5 labour-free scheduled maintenance services.

Biju Balendran, Deputy MD, JSW MG Motor India, said, “The commencement of production of the MG Majestor marks a significant step for us as we move closer to introducing a new benchmark in the premium SUV space. With the Majestor, we are bringing together strong engineering, advanced capability and a commanding presence, aligned to the evolving expectations of customers. Built at our Halol facility with advanced processes and stringent quality systems, the Majestor is engineered to deliver high standards of durability, performance and reliability. We are confident it will resonate strongly with customers looking for both capability and refinement in their next SUV.”

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