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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CNH Industrial has conducted the groundbreaking ceremony for a new manufacturing facility at the Yamuna Expressway Industrial Development Authority (YEIDA) in Uttar Pradesh, near Jewar airport.

The event was attended by the Chief Minister of Uttar Pradesh, Yogi Adityanath, alongside CNH Chair of the Board of Directors Suzanne Heywood, Chief Executive Officer Gerrit Marx and India Region President Narinder Mittal.

The new facility spread across 100 acres will produce tractors and engines for India and export markets, holding an annual production capacity of 100,000 tractors at full scale. The first phase of operations is scheduled to commence by mid-2028, complementing CNH's existing plants in Greater Noida, which manufactures tractors and engines and Pune, which produces balers, combine harvesters and sugarcane harvesters. The factory will incorporate robotics, automation, and artificial intelligence quality systems alongside renewable energy, water recycling, logistics, and waste recovery infrastructure.

Gerrit Marx, CEO, CNH, said, “India is playing an increasingly strategic role within CNH’s global manufacturing and technology ecosystem. The groundbreaking of our new facility at YEIDA marks an important step in expanding our manufacturing footprint and strengthening our ability to serve customers in India and around the world. This investment reflects our confidence in India’s manufacturing capabilities, engineering talent and long-term growth potential, while further strengthening the country’s role in CNH’s global operations.”

Narinder Mittal, President, CNH India Region, said, “We are committed to bringing world class technology and innovation to Indian farmers, supporting mechanisation and economic growth. Building on the legacy of our first tractor plant in Greater Noida, this new facility will strengthen and expand our existing footprint, leveraging proximity to our current operations and the state’s strong connectivity and industrial ecosystem. We are proud to contribute to the nation’s industrial growth and economic development, while strengthening our commitment to ‘Make in India’ for domestic and global markets.”

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American manufacturer of petroleum and speciality chemical additives Afton Chemical Corporation recently held a groundbreaking ceremony for a driveline and industrial additive manufacturing facility in Maharashtra, India.

The plant will be operated by Afton's partner, LSR Speciality Oils and is scheduled to begin commercial production in the first half of 2028.

The facility expands Afton Chemical's production footprint in India, building upon existing manufacturing operations for engine oil and off-road additives, while complementing capacity investments at the company's Singapore site. Once operational, the Maharashtra plant will supply additives to markets across ASEAN, Australia, China, India, Japan, Korea, Latin America and the Middle East.

Brian Paliotti, President, Afton Chemical, said, "Afton Chemical has been a trusted global supplier in the lubricant and fuel additives industry for more than 100 years. Providing our customers with a secure, reliable supply of high-quality products remains one of our highest priorities. This new facility will strengthen our manufacturing network, enhance supply chain resilience, and improve service for customers around the world."

Chris Dudding, Vice-President of Supply, Afton Chemical, said, "As our industry continues to evolve, Afton remains committed to investing in the assets, capabilities, and partnerships needed to remain a trusted long-term supplier of performance additives. This investment reflects our confidence in the future of the industry and our commitment to helping customers succeed for decades to come."

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Honda Motor Co., has announced a USD 3 billion investment to build an automobile manufacturing plant in Central Ohio, increasing its US automobile production capacity to approximately 1.3 million vehicles per year and creating more than 2,000 jobs. Production at the new facility, located between the existing East Liberty and Marysville plants, is expected to begin in 2029 pending regulatory approvals.

The new facility will feature a planned annual production capacity of 240,000 units, capable of assembling hybrid, petrol and battery-electric vehicles. The project forms part of a series of manufacturing investments across operations in Ohio, Alabama and Georgia designed to expand production of hybrid-electric vehicles and powertrains, expanding Honda's total North American vehicle assembly capacity to 1.9 million units annually.

The expansion supports the Japanese automotive major’s global plan to introduce 15 hybrid models by 2030. Additional network initiatives include retooling the Alabama Auto Plant to produce a V6 hybrid engine, retooling the Anna Engine Plant in Ohio for a four-cylinder Atkinson-cycle engine and expanding hybrid system assembly at transmission facilities in Ohio and Georgia to increase Ohio hybrid system output by 250 percent. Honda of Canada Mfg. in Alliston, Ontario, will also undergo retooling for hybrid model and engine assembly.

Bob Nelson, Executive Vice-President of American Honda Motor Co., said, "As Honda approaches 50 years of building products close to our customers in America, we are making one of the most significant commitments in our history to position Honda for the next 50 years. These investments strengthen America’s role as a cornerstone of Honda’s global future and reflect our confidence in our more than 30,000 Honda associates and the strength of American manufacturing. By expanding our comprehensive R&D and manufacturing capabilities, we will be better positioned to serve our customers and contribute to the economic vitality of the communities where we operate."

Mike DeWine, Governor of Ohio, said, "Honda's leadership could have chosen to build this plant anywhere in the world, but they chose Ohio because there are so many advantages to being here. For almost half a century, Honda and Ohio have grown together, and generations of families have built their careers on Honda's manufacturing lines. Today's announcement isn't just an investment in a new facility - it's an investment in Ohio's people and Ohio's future."

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Hindustan Zinc Limited has signed 11 Memoranda of Understanding (MoUs) at the ZnAL Confluence 2026 in Jaipur to advance the development of its proposed Zinc Industrial Park at Khankhala in Bhilwara district, Rajasthan.

The MoUs were executed with industrial partners including Gainwell Commosales, Epiroc Mining India, Sai Deepa Rock Drills, Shree Nakoda Infrasteel, Suryakiran Earthmovers, J.G. Chemicals, EPCM Service & Supply, Jasta Alloys, Jammu Pigments and Ampex Energies.

The participating entities intend to set up manufacturing, engineering and service operations connected to zinc and allied value chains. The proposed park, developed in collaboration with the Rajasthan State Industrial Development and Investment Corporation (RIICO), provides developed industrial land, access to a share of Hindustan Zinc's metal output, and research capabilities from the company's Centre of Excellence.

The park infrastructure supports Micro, Small, and Medium Enterprises (MSMEs) with investment entry levels starting from INR 50 million, covering sectors such as galvanising, die-casting, zinc alloys, zinc oxide and wire manufacturing.

Amarendu Prakash, CEO and Whole-time Director, Hindustan Zinc, said, "Zinc Park is a strategic initiative that reflects our long-term vision of building a globally competitive downstream ecosystem for zinc-based industries in India. The growing confidence of industry partners, across manufacturing, engineering and services, shows the strength of the proposition. Through assured ecosystem support, renewable energy integration and strong collaborations, we aim to enable MSME growth, create local employment and strengthen domestic manufacturing."

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