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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Skoda Auto Volkswagen India (SAVWIPL), one of the leading passenger vehicle manufacturers, has announced the start of production for the new Volkswagen Taigun from its Pune facility. The model is part of the group's strategy to manufacture vehicles in India for both domestic and international markets.

The Taigun is produced with high levels of localisation at the Chakan facility. Since its introduction in 2021, the company has manufactured over 143,000 units of the model in India. Approximately 30 percent of this total production has been exported to global markets.

The vehicle is engineered to meet European driving dynamics and maintains a 5-star safety rating. The updated iteration includes design changes and features intended to improve convenience based on consumer feedback.

Piyush Arora, Managing Director & CEO, Skoda Auto Volkswagen India, said, “The start of production of the new Volkswagen Taigun underscores the maturity of our world-class manufacturing ecosystem in India. Our Indian manufacturing facilities are geared to deliver global-quality vehicles with high levels of localisation, enabling us to respond quickly to what customers demand in India and in export markets. The Taigun stands as a perfect example of this approach, engineered in line with Volkswagen’s global benchmarks and produced in India with a sharp focus on efficiency, quality, and safety. As we roll out the new Taigun, we are further solidifying India’s position as a strategic production and export base for the Group.”

Nitin Kohli, Brand Director, Volkswagen India, added, “Since its launch, the Taigun has been instrumental in strengthening the brand’s SUV strategy. It has played a pivotal role in bolstering our product portfolio for discerning Indian buyers and their aspirations. The new Taigun is central to our strategic plan for the model line-up that will drive meaningful growth. The start of production for the new Taigun at our Chakan facility is a moment of great pride for us. It continues to signify our commitment to the Indian consumers who choose to own premium German-engineered products. We are certain the new Taigun will build on the success of its predecessor and elevate customer experience.”

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Chinese automotive major Changan Automobile and CAOA have inaugurated an automated production line in Anapolis, Brazil, marking the start of local assembly for the Changan UNI-T SUV.

The ceremony was attended by President Luiz Inacio Lula da Silva and Vice-President Geraldo Alckmin, signaling a phase of industrialisation and mobility investment in Brazil.

The inauguration initiates a USD 950 million investment cycle for 2026-2028, which adds to the earlier USD 570 million invested since 2023. Total investment in the Anapolis facility reaches USD 1.52 billion with the plant now equipped to have an annual production capacity of 90,000 units.

The UNI-T was developed over three years by a team of 200 Chinese and Brazilian engineers. Key technical features include:

• Powertrain: A 1.5 Turbo GDi BlueCore Flex engine, calibrated by CAOA to operate on any ethanol-petrol blend.
• Testing: The vehicle underwent 200,000 km of durability testing across various Brazilian climates.
• Digital Features: A localised Portuguese voice control system and connected cockpit tailored for the domestic market.
• Future Roadmap: Changan plans to introduce hybrid and electrified variants, supported by the federal government's MOVER programme.

The company expects to open over 60 dealerships across Brazil during 2026 to support its expanded sales footprint.

Zhu Huarong, Chairman, China Changan Automobile Group, said, "For Changan, Brazil is not only a place to invest, but a land where we committed to building a long-term future."

Carlos Alberto de Oliveira Andrade Filho, Co-President, CAOA, added, "The UNI-T represents far more than a new model. It demonstrates that Brazil can establish itself as a global hub for high-technology automotive engineering and production."

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Bengaluru-headquartered electric two-wheeler manufacturer Ultraviolette Automotive has announced a 5-year investment plan to expand its manufacturing operations in Karnataka.

The company signed a Memorandum of Understanding (MoU) with the Government of Karnataka during the ‘Invest Karnataka’ Conclave in Bengaluru, securing proposed incentive support through the Production-Linked Incentive (PLI) scheme.

The EV maker has announced a two-phase expansion strategy to increase domestic production and support global export requirements:

Phase 1: An investment of INR 2 billion to enhance existing capacity and manufacturing at the current Bengaluru facility.

Phase 2: The establishment of a new production plant in Karnataka with an annual capacity of 150,000 units.

The plan aims to deepen local manufacturing, create employment and accelerate research and development within the electric vehicle sector. Ultraviolette currently produces the F77 performance motorcycle and the X-47 Crossover, utilising proprietary battery technology.

Headquartered in Bengaluru, Ultraviolette intends to expand its Indian retail presence from 40 to 100 cities by the end of 2026. Internationally, the company has entered 12 European countries and has scheduled further expansion into Asian and Latin American markets.

Narayan Subramaniam, CEO and Co-Founder, Ultraviolette Automotive, said, “Karnataka has been central to Ultraviolette’s vision of Making in India for the World. This proposed manufacturing expansion reflects our confidence in the state’s forward-looking EV ecosystem, talent, and policy support. The combination of infrastructure readiness, proactive governance, and long-term incentive visibility creates a strong foundation for Ultraviolette’s next phase of growth.”

Niraj Rajmohan, CTO and Co-Founder, Ultraviolette Automotive, added, “Karnataka has been home to Ultraviolette’s R&D journey from the very beginning. The state offers a unique combination of deep engineering talent, strong supplier networks, and close proximity to key industrial and manufacturing hubs. What makes this especially meaningful for us is that we have built world-class products here proving that with the right talent, ambition, and ecosystem, innovation can be created right here in Karnataka.”

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Octillion Power Systems has announced that its India division has manufactured its 100,000th electric vehicle (EV) battery system. The milestone unit was produced on 20 March 2025 at the company’s ‘Pune Two’ facility for a passenger SUV developed by an Indian automotive manufacturer.

Since commencing Indian operations in 2017, Octillion has expanded from a single facility in Pune to three manufacturing sites across Pune and Gujarat. The company currently operates over 300,000 square feet of production space.

At present, the company’s annual energy production is expected to reach 8 GWh by 2026. The division supplies battery systems for passenger cars, trucks, buses and two-wheelers and three-wheelers. The company recently announced the build-out of its third major facility in Halol, Gujarat, to support a domestic supply chain and mass-scale quality control.

Paul Beach, Global President, Octillion, said, “Reaching 100,000 units made in India is a testament to the hard work and dedication of our entire team. This milestone reflects the trust our clients place in us to deliver safe, durable, and innovative batteries on time replete with exceptional value. Our position is strengthened as we expand in India and continue driving forward: product innovation, market growth and a more resilient supply chain.”

Nikhil Parchure, Senior Vice-President, Octillion, commented, “Our ambition in India is to enable cleaner, more sustainable transportation to help combat the pollution affecting our cities and communities. Reaching 100,000 packs is proof of our India team’s extraordinary dedication to this mission. We deeply appreciate our customers’ trust and we take pride in knowing that vehicles powered by Octillion batteries reflect the ingenuity and excellence of India.”

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