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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Pavna Industries, a leading automotive components supplier, has inked a Memorandum of Understanding (MoU) with the Government of Tamil Nadu (GoTN) to set up a new manufacturing facility at the Future Mobility Park in Shoolagiri, Krishnagiri District, Tamil Nadu.

The company shared that it has received full support from the government of Tamil Nadu for facilitating the timely and effective execution of the project.

Swapnil Jain, Managing Director, Pavna Industries, said, “We are proud to partner with the Government of Tamil Nadu for this project, which will generate employment, create new opportunities for local talent, and support the state’s thriving automotive ecosystem. This initiative is closely aligned with the Make in India vision and underscores Pavna Industries’ dedication to nation-building through world-class manufacturing. We value the support extended by the Government of Tamil Nadu in enabling this expansion.”

At present, the company has manufacturing plants in Aligarh, Uttar Pradesh, Aurangabad, Maharashtra and Pantnagar, Uttarakhand, along with a new plant being constructed in Hosur, Tamil Nadu.

Pavna Industries’ diverse product portfolio includes ignition switches, latches, auto locks, fuel tank caps, switches, oil pumps, throttle bodies and casting components, among others. It serves both domestic and international markets, with exports to countries such as Italy, Sri Lanka, Indonesia, Sudan, the U.S.A, and Bangladesh.

It counts the likes of Bajaj Auto, Kawasaki, Honda, TVS Motor Co, Mahindra & Mahindra, Royal Enfield, Ashok Leyland, Eicher Motors and several electric vehicle manufacturers like Revolt and Mahindra Electric, among others in its customer base.

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Bengaluru-based electric vehicle manufacturer Ola Electric has achieved a major manufacturing milestone of rolling out its 1 millionth vehicle from its Futurefactory in Krishnagiri, Tamil Nadu.

As part of the milestone, Ola Electric rolled out a special edition Roadster X+ in a midnight blue, with sporty red accents across dual-tone seat, rims and the battery pack.

It was in 2021 that Ola Electric started producing electric vehicles in the country, and the achievement comes within four years of the company’s operations.

 “This marks the celebration of every Indian who trusted us and believed in our mission. In four years, we’ve gone from an idea to becoming India’s EV two-wheeler leader. We built at scale and proved that world-class products can be designed, engineered, and manufactured right here in India. This milestone is a testament to how far we’ve come, and we’re just getting started! Our mission is clear: #EndICEAge and make India the global EV hub,” said an Ola Electric spokesperson.

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Pune-headquartered automotive company Kinetic Engineering has inaugurated its new Robotic Chassis Line at its plant in Ahilya Nagar, Maharashtra. This upgrade is part of a series of changes to improve the company's production capabilities.

The new line uses robots for welding and has a specific cell for the Kinetic DX EV e-scooter frames, clamping auto fixtures. This system is designed to provide consistency and accuracy. The facility's metal body panel line has also been upgraded with hydraulic and mechanical presses, as well as spot welding equipment.

The company's paint shop now uses a seven-tank process that includes a CED coating and a metallic topcoat for better protection and finish. A new store for frame parts has also been set up with quality control systems to manage inventory and supply parts to the assembly line.

Ajinkya Firodia, MD, Kinetic Engineering, said, “The future of manufacturing belongs to companies that can seamlessly integrate automation, precision and sustainability into their processes. With the inauguration of our robotic chassis line, we are not just upgrading a facility, we are reimagining how manufacturing should be done in India. This move positions us to deliver unmatched consistency and reliability, while also setting a benchmark for how automation can transform traditional industries. At Kinetic, we see this as part of a larger shift where Indian manufacturing stands shoulder to shoulder with the best in the world.”

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Mukand Sumi Special Steel (MSSSL), a joint venture between India’s Bajaj Group and Japan’s Sumitomo Corporation, has announced a major expansion with the construction of a new integrated steelmaking facility in Kanakapura, Koppal, Karnataka.

The new greenfield plant will boost MSSSL's production capacity to 700,000 tonnes per annum, making it one of India's leading special steel manufacturers. The project, which is currently awaiting environmental clearances, involves a capital investment of INR 23.45 billion, or around EUR 234 million.

The expansion is driven by the increasing demand for high-quality special steel in India's industrial, energy, and automotive sectors, supported by government initiatives like Atmanirbhar Bharat and strong economic growth. Since its inception in 2018, MSSSL has produced approximately 350,000 tonnes of special steel products annually, primarily for the automobile and engineering markets.

The new facility is designed with sustainability as a priority, adopting a Zero Liquid, Solid and Gaseous Discharge Model. It aims to source over 95 percent of its energy from renewables and is a crucial step towards the company's goal of achieving net-zero steel manufacturing by 2050. Future phases will incorporate hydrogen-ready infrastructure and carbon capture technologies.

Vipul Mashruwala, President, MSSSL, said, "This expansion marks a significant milestone in our long-term growth roadmap. Guided by the forward-looking vision of our Chairman, Niraj Bajaj, we are investing in sustainable and future-ready technologies that will strengthen our position in the global special steel market."

He added that the new facility will allow them to ‘serve growing demand with greater efficiency, quality, and environmental responsibility.’

The new plant is expected to begin operations by early 2028 and will include iron making, steel making, and blooming mill facilities with an initial capacity of 0.35 million tonnes per annum. The investment will also focus on integrating automation and digital technologies to ensure consistent product quality and optimised energy use.

The expansion will enable MSSSL to focus on critical applications in the automotive, railway, oil and gas, energy and bearing steel sectors, aligning with India’s ‘Industry 4.0’ initiative.

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