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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Ultium Cells, the joint venture between General Motors and LG Energy Solution, will upgrade its battery cell manufacturing plant in Spring Hill, Tennessee, United States, to produce lithium manganese rich (LMR) battery cells for General Motors electric vehicles.

The facility is scheduled to begin retooling later this year, with completion expected in 2028. The conversion will enable mass production of prismatic LMR cells, a chemistry which it claims offers up to 33 percent higher energy density than lithium iron phosphate (LFP) at a similar cost profile.

The project will create 500 positions, expanding the plant's existing workforce of 1,200 employees. The upgrade follows the start of LFP cell production for energy storage systems at the facility in June 2026, bringing cumulative investment across both projects to USD 1 billion by 2030.

The modification will allow Ultium Cells to manufacture high-nickel, LFP and LMR chemistries across pouch and prismatic form factors at the Tennessee site, supplying battery cells for General Motors' North American vehicle assembly plants and external stationary storage applications.

Kurt Kelty, Vice-President of Battery and Sustainability, GM, said, “Establishing LMR prismatic cell production at Ultium Cells in Spring Hill is a key step in GM’s strategy to match the right battery technology to customer needs and strengthen our leadership in domestic battery manufacturing and innovation. High-nickel batteries will continue to give customers the highest range in our portfolio, while adding LMR positions us to leapfrog today’s more affordable chemistries and deliver lower costs with better performance. This flexibility allows us to scale efficiently, reach more customers, and support GM’s long-term EV strategy and profitability journey.”

Tennessee Governor Bill Lee said, “Ultium Cells’ continued investment in Spring Hill underscores Tennessee’s role as a hub for advanced manufacturing and technological innovation. I thank Ultium Cells for their commitment to create new, high-quality jobs and to reinforce the strength of Tennessee’s manufacturing economy as we advance toward a future focused on clean, reliable energy.”

Injae Pahk, President, Ultium Cells, said, “This marks Ultium Cells’ second major investment in Spring Hill and reflects the company’s continued growth as a diversified battery cell manufacturer. By evolving production to meet changing market demands, Ultium Cells is reinforcing its long-term position as a key employer and technology leader in the U.S. battery cell sector.”

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Skoda Auto Volkswagen India, one of the leading passenger vehicle manufacturers, has commenced production of the updated Skoda Slavia sedan at its manufacturing plant in Chakan, Pune, ahead of the festive sales period in India.

The Slavia model line has recorded sales of nearly 80,000 units in India since its initial launch, capturing a segment market share of approximately 30 percent in its segment. The revised version introduces mechanical updates, including an eight-speed torque converter automatic transmission paired with the 1.0-litre TSI petrol engine, alongside a 5-star Global NCAP safety rating. It also gets a rear seat massage function, a 360-degree camera system and an infotainment setup with a Google Cloud-powered artificial intelligence assistant.

Andreas Dick, Skoda Auto Chief Production Officer, said, "India has become an increasingly important production location for Skoda Auto and an integral part of our global manufacturing network. Over the years, we have built strong capabilities here, combining local expertise with Skoda Auto’s global standards for quality, efficiency and engineering. The start of production of the new Slavia is another demonstration of these capabilities and further underlines the strategic importance of India within our global operations. We are confident in the continued development of our Indian manufacturing capabilities and their contribution to Skoda Auto’s international growth."

Piyush Arora, Managing Director & CEO, Skoda Auto Volkswagen India, said, "The start of production of the new Slavia marks an important milestone in our India journey and demonstrates the strength of our development and manufacturing capabilities in the country. The Slavia has developed a strong fan base through its design, driving dynamics, safety and engineering, and the new model builds on these strengths with meaningful enhancements in technology, comfort and convenience. With production now underway in Pune, we look forward to bringing the latest evolution of the Slavia to our customers while continuing to deliver the quality and engineering excellence they expect from a Skoda."

Ashish Gupta, Brand Director, Skoda Auto India, said, “For over 90 years, sedans have been an integral part of our global heritage. The new Slavia proudly carries this legacy forward. With close to 30% segment share, the Slavia has earned the trust of Indian customers. The new Slavia elevates everything customers value about the car, combining timeless design, European engineering and safety, engaging performance, modern technology, and greater comfort. As we begin production of the new Slavia, we reaffirm our commitment to strengthening Skoda’s sedan legacy in India with products that remain fresh, relevant, and aspirational.”

The assembly of the model forms part of Skoda Auto Volkswagen India's manufacturing operations across its two facilities, which possess a total annual production capacity of 315,000 units. The group surpassed two million locally manufactured vehicles in 2025 and has exported over 725,000 units to more than 40 international markets, supported by product development and localisation efforts at its Technology Centre in Pune.

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German luxury car brand Audi India has commenced local assembly of the all-new Audi Q3 at the Skoda Auto Volkswagen India (SAVWIPL) plant in Chhatrapati Sambhajinagar ahead of its official market launch on 16 October 2026.

The model is powered by a 2.0-litre petrol engine and features Audi's quattro all-wheel-drive system, combining standard compact SUV proportions with localised production.

Piyush Arora, MD and CEO, Skoda Auto Volkswagen India, said, “The start of production of the all-new Audi Q3 is an important milestone for our Group in India. It reflects the strong capabilities of our Chhatrapati Sambhajinagar facility and our commitment to supporting the growth of our brands in the country. We are proud to produce the latest Audi Q3 in India, with the same high standards of quality, precision and engineering excellence that define Audi globally.”

Balbir Singh Dhillon, Brand Director, Audi India, said, “Today marks a significant day for us as we begin the start of production and take another important step towards the launch of the all-new Audi Q3. The Audi Q3 has been an important gateway to the Audi brand, and this new generation is set to build on that success with its distinctive design, progressive technology and dynamic character. We see the all-new Audi Q3 as a strong catalyst for the next phase of our growth — helping us reach a broader customer base, strengthen our presence and further build the Audi brand in India.”

Bookings for the all-new Audi Q3 have opened across Audi India's official website, the myAudi Connect mobile application and the brand's dealership network in the country.

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Electric two-wheeler startup Creatara Mobility has inaugurated its initial production facility in Faridabad, Haryana, featuring an installed annual production capacity of 30,000 units. The facility marks the transition from research and development to assembly for the vehicle startup.

Located in the Delhi-NCR, the plant will produce Creatara's IN40 and VM4 electric two-wheeler models for distribution in domestic and export markets. The e-scooter utilise a proprietary platform incorporating an artificial intelligence-ready Vehicle Control Unit alongside portable, swappable battery packs. The manufacturing facility operates using the Japanese 5S organisational method to standardise production processes across assembly, component testing and battery integration.

Vikas Gupta, Founder and CEO, Creatara Mobility, said, "Creatara’s journey has never been about factories first, but about a vision realised step by step. It began with an idea, evolved into a product, proved its potential and achieved certification. Now, that vision is being industrialised and scaled. The path has been deliberate: Build → Validate → Certify → Industrialise → Scale — each stage strengthening the next."

The company first displayed its vehicle prototypes in January 2025 before securing product certifications and establishing supply chain partnerships. Creatara's business model targets young demographics through vehicle customisation options and distinct body designs across its electric crossover segment.

Ringlarei Pamei, Co-Founder, Creatara Mobility, said, "We have built Creatara with disciplined capital. Our focus has never been to spend our way into scale. It has been to create capability at every stage — technology, product, certification, supply chain and now manufacturing. We believe there is tremendous opportunity for companies that can combine ambition with capital discipline and that is the model we want to build at Creatara."

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