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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Automotive component supplier Harman, a subsidiary of Samsung Electronics Co., has announced a new investment of INR 3.45 billion (USD 42 million) to expand its automotive electronics manufacturing facility in Chakan, Pune, India. This commitment includes an immediate investment of INR 450 million and an additional INR 3  billion over the next three years to support advanced telematics and next-generation automotive connectivity programmes.

This latest funding brings Harman’s cumulative investments in the Pune plant to INR 5.54 billion (USD 67 million) since its inception in 2014. The expansion is expected to create 300 new jobs in Pune by 2027.

The expansion, inaugurated by CEO Christian Sobottka, adds 71,505 square feet of built-up area, boosting the plant's production capacity by 50 percent. By 2027, the facility is poised to deliver an annual output of 4 million car audio components, 1.4 million infotainment units and 800,000 million Telematics Control Units (TCUs).

The facility will now manufacture the Harman Ready Connect, a pre-developed, all-in-one Telematics Control Unit co-developed with Samsung. This commitment, the company states strengthens the Government of India’s vision to ‘Make in India, for the World’ by positioning the country as a hub for advanced automotive manufacturing.

The Pune plant supplies all major Indian OEMs, including Tata Motors, Maruti Suzuki India and Mahindra & Mahindra, alongside export customers in Europe and North America.

Christian Sobottka, CEO and President of Automotive, Harman, said, “This investment is a clear signal of our commitment to India. Pune is not just adding capacity - it’s building the future of connected cars. From 5G telematics to sustainable manufacturing, India’s talent and innovation strength make it central to Harman’s global automotive growth.”

The Pune facility also remains a leader in the company's sustainability journey. It currently uses on-site solar installations that generate over 317,000 KWh of electricity annually and is progressing toward 100 percent renewable electricity use by 2030.

Krishna Kumar, Managing Director & Automotive Head, Harman India, said: “India is where Harman designs, builds and exports the next generation of in-car experiences. From connected infotainment to immersive audio to telematics and connected safety solutions, our engineers here don’t just serve India - they serve the world. That’s why India sits at the heart of Harman’s global automotive strategy.”

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Toyoda Gosei Co, and Kansai Paint Co, have partnered to develop an in-mould coating technology that can be applied to the mass production of large plastic automotive exterior parts. This marks the first time in Japan that this technology is applicable to large exterior components, which have a high level of difficulty in production.

In-mould coating involves forming and painting large plastic parts inside the mould itself, a process typically restricted to smaller products.

The development uses Toyoda Gosei's proprietary mould technology for large parts and paint material design technology developed through the collaboration. This new process achieves a seamless appearance with a high level of smoothness on the painted surface, allowing for new moulding designs.

Other benefits include:

• Improved Durability: The use of urethane paint makes abrasions less noticeable.
• Environmental Reduction: A drying furnace is no longer necessary, which the company states reduce CO2 emissions during production by approximately 60 percent.

The first large painted products using this technology are scheduled for market launch in spring of 2026. Toyoda Gosei plans to expand this technology to its international production sites as a pillar of its new decorative technologies.

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The Indian Army's Fire & Fury Corps has signed a Memorandum of Understanding (MoU) with Airbornics Defence & Space (ADSL), part of the JCBL Group, to establish a New Generation Vehicle (NGV) Repair Hub and Warehouse. The facility will be located inside the 14 Corps Zonal Workshop in Leh.

The initiative aims to boost the Army’s logistics readiness by setting up a dedicated OEM warehouse and repair facility for New Generation Vehicles within the Army’s premises.

The ceremony was held at Headquarters 14 Corps, Leh, and was presided over by Lt Gen Hitesh Bhalla, Corps Commander, 14 Corps. Brig Nipoon Sood, Brig EME, 14 Corps, formally signed the MoU on behalf of the Army.

Under the collaboration, the JCBL Group (ADSL) will provide its expertise in defence manufacturing, support, training, retro-modification and R&D know-how through the NGV Hub framework.

The Group shall also maintain stocking of fast-moving spares for vehicles and equipment supplied to the Indian Army. Additionally, it will supply parts and components of war stores, which it provides to the Ordnance & EME Channels of Indian Army, through its group companies.

The Indian Army plans to expand this presence of industry warehouses to three more forward locations of the 14 Corps Area of Responsibility in the future.

Lt Gen Hitesh Bhalla, Corps Commander, 14 Corps highlighted that this partnership between Indian Army and Industry would significantly enhance the operational readiness of 14 Corps. He further stressed the need to ensure that Army units fully exploit the presence of Industry Warehouses at these forward locations of Ladakh.

Rishi Aggarwal, Managing Director, JCBL Group, said “The JCBL Group takes pride in being the Industry Partner of the Indian Army. This fresh collaboration with the Fire and Fury Corps of the Northern Command is very special to the Group since it is the most operationally committed formation of the Defence Forces. We compliment Lt Gen Hitesh Bhalla, Corps Commander, 14 Corps for his exceptional vision of incorporating the Industry at Field Formation Level thereby ensuring a significant amelioration of equipment availability and Operational readiness.”

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The Association of Indian Forging Industry (AIFI) showcased India's industrial sector at the 24th International Forging Congress (IFC 2025) in Frankfurt, Germany.

Yash J Munot, AIFI President, delivered a keynote presentation on India's manufacturing capabilities, technological advancements and vision for global partnerships. He highlighted India's status as the world's second-largest producer of forgings and its position in the global supply chain.

In his address, ‘Forging India’s Future – Partnering with the World,’ he discussed India’s journey of modernisation, global integration and sustainable growth.

"India has transformed from being a land of opportunity to a land of action. The forging industry stands as a true reflection of this transformation, built on the pillars of scale, skill and sustainability and ready to co-author the future of global manufacturing. We have evolved from a labour-intensive past to a capital-intensive, technology-driven present, powered by significant investments in Industry 4.0, AI, automation and smart manufacturing practices. In an era shaped by geopolitical shifts, fluctuating material costs and the global call for sustainability, India’s forging industry offers reliability, quality and resilience. We are not here merely as suppliers, but as partners and collaborators, committed to forging a stronger, more innovative and sustainable industrial future for the world,” he said.

India’s forging industry produces 2.9 million metric tonnes annually, with an installed capacity of 4.8 million MT, representing investments worth USD 3.8 billion. The sector employs over 300,000 people. It supplies components to sectors including automotive, railways, aerospace, defence, construction equipment and engineering. Around 30 percent of total production is exported to Europe, North America and Asia.

The industry has adopted Industry 4.0 technologies such as automation, artificial intelligence, digital simulation and data analytics. The focus on energy-efficient furnaces and circular manufacturing reflects the sector’s commitment to environmental responsibility.

Munot highlighted the upcoming Forging Simulation Centre in Pune, designed to help small and medium enterprises (SMEs) improve productivity and minimise environmental impact through digital technologies.

He also announced the 4th edition of Forgetech India, AIFI’s biennial exhibition and conference, scheduled for October 2026.

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