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.

Kobelco Construction Equipment India (KCEI), a subsidiary of Japan-based Kobelco Construction Machinery Co, has attained a new production milestone in the country.

The company recently rolled out its 20,000th made-in-India excavator from its plant in Sri City, Andhra Pradesh. What’s more, the company as part of its India outlook has also announced setting up a new R&D facility, which will focus on developing new technologies, engineering solutions, customisation and product innovation.

At present, the Sri City facility has a production capacity of 3,000 units per annum and supplies excavators for both domestic and 16 international markets. The company claims it currently enjoys over 25 percent market share in India.

Takemichi Hirakawa, Managing Director & CEO, Kobelco Construction Equipment India, said, "Reaching the 20,000th excavator production milestone reflects our commitment to delivering high-quality construction equipment. India has emerged as an important manufacturing base for Kobelco, meeting both domestic demand and expanding our global footprint. As part of our long-term growth strategy, we remain aligned with the ‘Make in India’ initiative and continue to invest in R&D, strengthening our capabilities."

Hindalco Industries, the metals flagship company of the Aditya Birla Group, has unveiled its new brand identity, which it shared marks its transformation from a materials supplier to an engineered solutions provider.

The new identity represents its focus from just being a supplier of metals to a partner with a focus on closing the ecosystem loop right now from sourcing, refining, co-developing and recycling. The company has also outlined an ambitious INR 450 billion towards strengthening aluminium, copper and specialty alumina business.

In an event held in Mumbai, the company displayed its new range of solutions targeted for various industries including B2C, B2B and even B2G. For the automotive industry the company is looking to work together with automakers and suppliers, especially supporting the transition towards lightweighting vehicles and electrification.

Interestingly, the company has also commenced what it claims is India’s first e-waste recycling plant by Birla Copper and a 100MW renewable energy project in Odisha.

Kumar Mangalam Birla, Chairman, Aditya Birla Group unveiled the new identity and said, “Today, Hindalco is a mini conglomerate in itself, with 52 plants across 10 countries producing a diverse portfolio of high-quality products that contribute to the global economy. We are committing INR 450 billion across aluminium, copper and specialty alumina businesses to deliver both upstream and next-generation high-precision engineered products”. 

“Hindalco’s new identity reflects our role as a catalyst for change, a problem solver and a co-creator of new solutions that power progress across industries. And above all, it embodies our commitment to always being a force for good,” added Birla.

The new logo features a bold and dynamic ‘H,’ which the company shared represents forward momentum and reinforces its role in shaping India’s industrial and sustainable future.

Satish Pai, MD, Hindalco Industries, added, “This marks a pivotal moment in Hindalco’s journey as we transition from a metals manufacturer to an innovation-driven solutions provider. Our investments in advanced materials, circular economy solutions, and cutting-edge applications will redefine manufacturing in India and beyond. The new brand identity, Engineering Better Futures, reflects our core principles: Sustainability, Circularity, Durability and Precision Engineering. These pillars form the foundation of our transformation, ensuring we create a lasting impact for generations to come.”

Ashok Leyland, one of the leading commercial vehicle manufacturers, has inaugurated its new 4,800 buses per annum manufacturing facility near Vijayawada, Andhra Pradesh.

The new facility spread across 75 acres can manufacture the complete range of Ashok Leyland diesel buses along with Switch Mobility’s electric buses. The facility features a Nalanda learning center and an advanced service training center. The plant was inaugurated by Nara Lokesh, Minister of Information Technology, Electronics and Communications and Human Resource Development, Government of Andhra Pradesh.

Furthermore, the auto major as a symbolic gesture also handed over the keys of the Switch electric double-decker bus to the government of Andhra Pradesh as part of its commitment to promoting sustainable public transportation. The event saw participation from M Ram Prasad Reddy, Minister of Transport, Sports, Youth Affairs; T G Bharath, Minister of Industries; V Balashowry, MP, Krishna District; Y Venkata Roy, MLA, Gannavaram Constituency; Ashok P Hinduja, Chairman, Hinduja Group – India and Shom Ashok Hinduja, President Alternative Energy and Sustainability, Hinduja Group, along with dealers, customers, suppliers and other dignitaries.

 “This is a prestigious occasion for Andhra Pradesh. We are delighted to welcome Ashok Leyland to our growing industrial ecosystem. This plant strengthens our reputation as an emerging manufacturing hub and will play a crucial role in providing employment, enhancing skill development, and boosting the overall economy of the State,” said Nara Lokesh.

Dheeraj G Hinduja, Chairman, Ashok Leyland, said, “Inspired by the vision of the Chief Minister Chandrababu Naidu, who has crafted a progressive industrial policy for the State, we are excited to be in Andhra Pradesh and our relationship with this State has been over several decades now through Ashok Leyland and other Hinduja Group entities. The inauguration of the new plant marks the beginning of yet another chapter for Ashok Leyland in this vibrant State, where our Group is committed to explore more opportunities for driving economic growth, creating employment opportunities, and generating prosperity in the region.”

Shenu Agarwal, MD & CEO, Ashok Leyland, added, “With inauguration of the new plant, Ashok Leyland will further consolidate its position as No.1 bus brand in India and among the top 5 globally. This facility will help us cater to the growing demand for fully built buses in India. Production in the new plant has just commenced and owing to our large order book, the plant will start operating at 100 percent capacity from day one. The new plant is equipped with state-of-the art equipment with high levels of automation signifying our commitment to making products of highest quality standards.”

Volvo Group in India, Ericsson and Bharti Airtel have come together to explore the potential of Extended Reality (XR), digital twin technologies and artificial intelligence (AI) in the manufacturing sector. The partnership aims to leverage 5G and 5G Advanced to transform industrial operations, improve workforce training and real-time process optimisation.

As per the understanding, the research will be conducted at the Volvo Group Factory and Volvo Group’s R&D Centre in Bengaluru. The facilities will explore industrial Metaverse applications including human and machine interaction and collaboration, which means a blend of physical and digital worlds. The idea is to enhance efficiency, foster innovation in manufacturing and real-time optimisation using AI technologies.

The partnership will leverage high-speed 5G network to test ‘what if’ scenarios and improve production workflow. They will also explore potential new revenue streams and business models for the telcos.

Kamal Bali, President & MD, Volvo Group India, said, “Our industry is undergoing a once in a lifetime transformation driven by the emerging trends across automation, connectivity and alternative energy carriers – tools which will be key in our ambitions to be net zero and shape a sustainable future for all. This transformation also includes the way we work and collaborate across our industrial and R&D sites. 5G, coupled with extended reality applications, will help foster innovation as well as collaboration between our sites and engineers, in real-time, through the power of connectivity & digitalization backed by advanced AI technologies.”

Sharat Sinha, Director & CEO, Airtel Business, said, “We are thrilled to leverage the capabilities of our advanced 5G network for innovative industrial applications in partnership with Ericsson and Volvo Group. Through this collaboration, our high-speed, low latency 5G network will redefine and transform the manufacturing sector by enabling real-time XR applications for enhanced productivity and efficiencies, unlocking new revenue streams and accelerating the adoption of Industry 4.0 applications.”

Nitin Bansal, Managing Director, Ericsson India, said, "As India embraces Industry 4.0, 5G will be a game-changer towards enabling intelligent, connected, and immersive industrial experiences. This collaboration with Airtel and Volvo Group underscores Ericsson’s commitment to driving innovation through 5G and extended reality. By combining our expertise in network technology with cutting-edge XR applications, we are creating an ecosystem that will help industries to transform manufacturing. The research insights will be instrumental in shaping the future of industrial digitalization, not just in India but globally."