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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Ashok Leyland, one of the leading commercial vehicle manufacturers in the country, has opened a new integrated manufacturing facility in Lucknow, Uttar Pradesh.

The greenfield facility, located near Lucknow Airport in Sarojini Nagar, was inaugurated by Yogi Adityanath, Chief Minister of Uttar Pradesh, alongside Union Ministers Rajnath Singh and H D Kumaraswamy.

The 70-acre site is designed to produce 5,000 vehicles annually, with a primary focus on electric buses and other green mobility solutions. The facility employs a workforce predominantly from Uttar Pradesh, including a high percentage of women. To support its sustainability goals, the plant features rooftop solar panels, energy-efficient lighting and zero-discharge water systems.

Dheeraj Hinduja, Chairman, Ashok Leyland, said, "The inauguration of this new plant marks the beginning of an important new chapter for Ashok Leyland in the vibrant state of Uttar Pradesh. Our Group remains deeply committed to unlocking further opportunities that drive economic growth, create meaningful employment, and foster long-term prosperity in the region. This manufacturing plant reaffirms our resolve to help shape the future of India’s commercial vehicle industry, and we are confident that it will make a strong contribution towards employment generation while advancing sustainable mobility. With this new plant, we are preparing ourselves for the future and take one step further to achieve our Net Zero emission goals."

Shenu Agarwal, MD & CEO, Ashok Leyland, said, "As one of India’s largest and most progressive states, Uttar Pradesh has demonstrated a strong and consistent commitment to environmental responsibility and sustainable development, making it a natural partner in our green mobility journey. This coupled with Ashok Leyland’s ambition to achieve Net Zero by 2048 has been a key catalyst for establishing this state-of-the-art facility in Uttar Pradesh. Equipped with most modern technology and high levels of automation, the plant reflects our focus on world-class quality and innovation. With a strong emphasis on electric buses, this facility marks a significant step towards building a cleaner, future-ready mobility ecosystem for India.”

The plant's logistics are managed using battery-operated vehicles to maintain its status as a green facility. This expansion aligns with Ashok Leyland's target to reach Net Zero emissions by 2048 and supports the state of Uttar Pradesh's transition toward electric transportation.

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Bharat Forge and Germany-based Agile Robots have agreed to explore a collaboration to develop AI-driven robotics and industrial automation. The partnership combines Bharat Forge's domain expertise with Agile Robots' automation solutions to deploy technology for the automotive, healthcare, and consumer electronics industries.

The agreement focuses on civilian industry and manufacturing. Under the Memorandum of Understanding (MoU), the companies will co-develop and offer solutions in manufacturing, industrial CPG and logistics for markets in India and Southeast Asia. The partnership also aims to develop vision and AI-based robotic systems to enable autonomous ‘dark’ factories.

Amit Kalyani, Vice-Chairman and Joint Managing Director, Bharat Forge, said, “This strategic collaboration with Agile Robots is a reinforcement of Bharat Forge’s ambition to provide state-of-the-art intelligent robotic and automation solutions across multiple industries while driving manufacturing efficiencies at home. Manufacturing in India is on a steep growth path, and I am very excited that with Agile Robots we are going to deploy bespoke, modular and intelligent automation solutions across the sectors.”

Rory Sexton, Executive Director, Agile Robots, said, “By partnering with Bharat Forge, Agile Robots is strengthening its position in India's rapidly growing manufacturing sector. Combining Agile Robots’ proven leadership in AI driven robotic automation with Bharat Forge’s sectoral expertise will allow us to improve the efficiency and precision of entire production systems.”

The collaboration intends to set up capabilities for bespoke solutions while utilizing existing Agile Robots technology. By integrating AI into production systems, the companies aim to improve precision and efficiency across manufacturing sectors in the region.

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Hindustan Zinc and Silox India have expanded their long-term collaboration to focus on industrial decarbonisation and the development of sustainable supply chains. As part of the agreement, Silox India has adopted EcoZen, a low-carbon zinc brand produced by Hindustan Zinc, for use across its manufacturing operations. This integration is intended to reduce the carbon footprint of zinc-based chemical products while maintaining existing quality standards.

EcoZen is manufactured using renewable energy and has a verified carbon footprint of less than one tonne of CO2 per tonne of zinc. According to the company, this is approximately 75 percent lower than the global industry average. The material offers full traceability, allowing downstream users to account for the environmental impact of their inputs. When used in galvanising, EcoZen can prevent approximately 400 kilograms of CO2 emissions per tonne of steel compared to conventional zinc.

Hindustan Zinc, a Vedanta Group company, supplies materials to various sectors including infrastructure, automotive and renewables. The company is a member of the International Council on Mining and Metals (ICMM) and has prioritised the reduction of Scope 3 emissions for its clients. Silox India, which specialises in inorganic chemistry and non-ferrous metal derivatives, will use EcoZen to support its environmental, social, and governance (ESG) targets.

Arun Misra, Chief Executive Officer & Whole-time Director, Hindustan Zinc, said, “Decarbonisation at Hindustan Zinc is not limited to our own operations; it extends to how our products are used across industries. EcoZen represents a step change in how zinc can support cleaner manufacturing. By partnering with customers like Silox India, we are enabling the wider adoption of low-carbon solutions at scale.”

Prakash Raman, Managing Director, Silox India, said, “Integrating EcoZen into our manufacturing processes allows us to lower embedded emissions across our product portfolio while continuing to deliver high-performance solutions to our customers. This partnership demonstrates how upstream innovation can accelerate sustainability outcomes downstream.”

The partnership aligns with the increasing demand for low-carbon materials in the automotive and infrastructure sectors. EcoZen is supported by life-cycle assessments and globally recognised ISO and REACH certifications to ensure transparency and compliance with environmental regulations.

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Maruti Suzuki India, the country’s largest passenger vehicle manufacturer, has reported its highest-ever annual production with 2.25 million units produced in CY2025.

This also marks the second year the automaker surpassed the 2 million units production threshold. The total includes vehicles destined for the domestic market, exports and supplies to other original equipment manufacturers (OEMs). The Fronx, Baleno, Swift, Dzire and Ertiga were the five models with the highest production volumes during this period.

The company began operations in 1983 at its facility in Gurugram and has since expanded its manufacturing footprint to include sites in Manesar and Kharkhoda, alongside the integration of its Gujarat plant.

At present, Maruti Suzuki India produces 17 models and 650 variants. To address future demand in India and abroad, the firm intends to increase its total production capacity to 4 million units per annum.

Hisashi Takeuchi, Managing Director & CEO, Maruti Suzuki India, said, “This record production is a result of the dedication of our employees and the strong synergy that we share with our supplier partners. A high degree of localization has enabled us to achieve such scale while maintaining world-class quality, highlighting the strength and global competitiveness of India’s automotive manufacturing ecosystem. We remain committed to expanding our manufacturing footprint and strengthening India’s automobile manufacturing capabilities in line with the Government of India’s ‘Make in India’ initiative.”

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