There is a "plus-one” trend that India can ride to become an A-lister in the global auto component industry.

It started when several original equipment manufacturers (OEMs) in the auto space started considering moving their component sourcing operations — or at least a part of it — out of China, long considered the world’s factory. The decision comes as the US and other countries have accused China of manipulating its currency and making it uncompetitive for them. In 2018, the US imposed tariff and trade barriers on goods from the East Asian giant. Anti-China sentiment reached a peak when the novel coronavirus was traced to a market there.

These and other simmering geopolitical issues have encouraged OEMs — which have been complaining of the rising cost of doing business in the country — to look at other options. This drive to de-risk the global supply chain from events like the coronavirus gives India an opportunity to become a major manufacturing hub. While several southeast Asian countries are looking to attract these companies, India provides an unparalleled opportunity to auto OEMs, given that it already has an established auto sector.

China’s auto-parts industry is still gargantuan at $550 billion, against India’s $50 billion. But two recent trends suggest India can narrow this gap if the right initiatives are taken quickly. First, global automotive players and tier-1 suppliers are increasingly talking about the "China Plus One” model — a strategy to diversify geographically. Second, and more significantly, at least 30 international purchasing offices — offshore outfits that procure parts — have now become active in India, from 8-10 earlier.