Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?

With 19 years of comprehensive experience in global strategic sourcing across the automotive industry, including three pivotal years (2019-2022) at Honda Global Purchasing office in Japan, my expertise spans the complete automotive value chain from component sourcing to supplier development. My Japan assignment provided deep insights into world-class lean manufacturing principles, supplier quality systems, and Honda's renowned cost management & global sourcing methodologies. This international exposure, combined with extensive experience in India's dynamic automotive ecosystem, has equipped me with a unique perspective on both global best practices and local market nuances. My core competencies include supplier lifecycle management, cost optimization strategies, supply risk mitigation frameworks, and driving localization initiatives across powertrain, electronics, and emerging EV components.

 

Q2. What shifts are you observing in the size and structure of the vendor ecosystem supporting passenger vehicles in India? Are more global suppliers entering, or are local Tier-2/Tier-3 vendors scaling up?

The vendor ecosystem supporting passenger vehicles in India is undergoing significant structural transformation. Both global suppliers and local Tier-2/Tier-3 vendors are simultaneously scaling up, creating a more robust and diversified supply base.

Global Supplier Entry: Major international suppliers are establishing manufacturing footprints in India, driven by the "China+1" diversification strategy and India's emergence as a global automotive hub. Companies like Bosch, Continental, and Denso have expanded their local operations significantly. Japanese suppliers, in particular, have made strategic investments following their OEM partners - Suzuki has enabled numerous Japanese Tier-1 suppliers to establish Indian operations to implement Just-in-Time systems.

Development of Local Suppliers: Tier-2 and Tier-3 suppliers are expanding at an unprecedented rate, and many are switching from make-to-order to advanced manufacturing processes. This expansion is uneven, though, as smaller independent operators struggle to achieve quality standards and technology needs, while larger Tier-2 suppliers with group corporate support show superior survival and scaling skills. Over 400 localization projects with investments over ₹3,000 crore have been estimated by the industry in recent years.

As states like Tamil Nadu, Maharashtra, and Gujarat maintain their dominance, emerging Tier-2/Tier-3 hubs in newer regions are ensuring more decentralized growth.

 

Q3. What market forces — such as government incentives, raw material volatility, or localization mandates — are having the biggest impact on purchasing strategies today?

Government Incentives Leading the Charge: The Production Linked Incentive (PLI) scheme has emerged as the most significant game-changer, attracting committed investments worth ₹67,690 crore in the automotive sector with a focus on Advanced Automotive Technology products. The scheme has already disbursed ₹322 crore to approved companies, demonstrating tangible impact.

Raw Material Volatility Management: Commodity price fluctuations have become a critical concern. Steel prices surged 36% year-on-year, aluminum by 49%, and copper by 89% during peak volatility periods. This has forced purchasing teams to implement dynamic pricing mechanisms, strategic inventory buffers, and longer-term contracts with price adjustment clauses. The industry has learned to budget for material price volatility as a standard practice rather than an exception.

Localization Mandates Driving Strategy: The government's aggressive localization roadmap identifying 28 essential components for indigenization has fundamentally altered sourcing strategies. New EV localization norms mandate higher percentages of local sourcing for critical components, with stricter safety and compliance requirements. This has created opportunities for domestic suppliers while challenging import-dependent operations to restructure their supply chains.

The convergence of these forces has shifted purchasing from purely cost-focused to value-based strategies emphasizing supply security, quality consistency, and regulatory compliance.

 

Q4. Which product segments within automotive components — such as powertrain, safety, electronics, interiors, or EV-specific systems — are growing the fastest?

Dominance of Automotive Electronics: The electronics sector is expanding rapidly, with a 2024 valuation of USD 11.2 billion and a 2033 forecast of USD 18.6 billion at a compound annual growth rate (CAGR) of 5.8%. This growth is being driven by linked car technologies and infotainment systems, and advanced driver assistance systems (ADAS).

EV-Specific Components Surge: The automotive power electronics industry is anticipated to expand at a compound annual growth rate (CAGR) of 6.60% through 2034, with battery management systems (BMS) and power electronics representing the fastest-growing categories. By 2030, it is anticipated that India's EV battery manufacturing market would have grown to a major size at an aggressive 23.17% CAGR.

Powertrain Evolution: Hybrid technologies, BS-VI compliance requirements, and sophisticated transmission systems are driving the powertrain segment's strong growth at a 7.10% CAGR despite the EV transition. Both new electric powertrain components and conventional ICE enhancements are included in this segment.

Safety and Compliance Components: Following Bharat NCAP implementation and mandatory safety features like six airbags, safety-related components including sensors, electronic stability control systems, and structural reinforcements are experiencing strong demand growth.

The electronics and EV-related segments clearly lead growth, reflecting India's transition toward connected and electrified mobility.

 

Q5. How do you see environmental and sustainability benchmarks influencing supplier eligibility over the next few years?

Regulatory Framework Evolution: The Business Responsibility and Sustainability Reporting (BRSR) mandate requires all listed automotive companies to disclose ESG metrics, creating accountability pressure throughout the supply chain. The new End-of-Life Vehicle Extended Producer Responsibility (EPR) rules effective April 2025 will make manufacturers responsible for vehicle lifecycle management.

OEM Sustainability Integration: Three-fourths of Indian OEMs now list sustainability among their top 5 business KPIs, with many incorporating decarbonization targets in RFQs. Leading OEMs are working with suppliers to redesign for circularity and achieve specific emission reduction targets across Scope 1, 2, and 3 emissions.

Carbon Footprint Requirements: Suppliers increasingly need renewable energy sourcing capabilities, waste reduction programs, and carbon footprint transparency. Many component manufacturers have set 2030 targets including 10-30% reduction in Scope 1 emissions, 30-40% reduction in Scope 2 emissions, and significant increases in renewable energy usage.

The Circular Economy Expectations: Recyclability, circularity of materials, and environmentally friendly packaging are becoming necessities. Competitive benefits are gained by suppliers who exhibit innovation in closed-loop water systems, recycled materials, and zero-waste-to-landfill processes.

Global Compliance Readiness: As Indian suppliers serve global markets, they must meet international sustainability standards like Euro VII emission norms and EU regulatory requirements. This global compliance capability is becoming a supplier differentiation factor.

Over the next 3-5 years, sustainability benchmarks will evolve from nice-to-have to mandatory supplier qualification criteria, with OEMs potentially blacklisting non-compliant suppliers.

 

Q6. Are there particular automakers whose cost-control or localization practices you think are reshaping industry expectations?

The Cost Leadership Model of Maruti Suzuki:Maruti Suzuki continues to lead the industry in cost control and localization, with a 42% market share. With over 90% localization content, their supplier development strategy has established itself as the industry standard. The expectations of the supplier ecosystem are changing as a result of their emphasis on end-to-end localization, which forces Tier-1 suppliers to localize the sources of their raw materials.

Tata Motors' Transformation Strategy: Tata Motors has demonstrated remarkable transformation from traditional manufacturing to technology-driven operations. Their aggressive EV strategy, capturing 89% of India's passenger EV market, has set new benchmarks for electric mobility adoption and supplier capability requirements. Their emphasis on digital transformation and B2B2C business models is influencing industry practices.

Hyundai's Quality and Technology Integration: Hyundai has set new benchmarks for supplier quality and service network requirements due to its constant customer service rankings, which have allowed it to maintain a 15% market share with excellent after-sales service. Best-in-class supplier partnership approaches are exemplified by their localization strategy, which brings Korean suppliers to India while upholding international quality standards.

Honda's Lean Manufacturing Influence: Honda's Japanese operational excellence, including their supplier development programs and quality systems, continues influencing industry standards. Their approach to supplier capability building and long-term partnership models has been adopted by other OEMs seeking similar operational efficiency.

These OEMs collectively are driving industry toward higher localization rates, superior quality standards, digital integration, and sustainable practices. Their success models are compelling other manufacturers to adopt similar strategies, creating industry-wide elevation in expectations.

 

Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?

If I were evaluating automotive companies as an investor, the most critical question I would pose to senior management would be:

"How are you positioning your company to capture value in the industry's three simultaneous transitions - electrification, digitalization, and sustainability - while maintaining profitability during the extended ICE-to-EV transition period?"

Supporting Deep-Dive Questions:

Transition Portfolio Management: What percentage of your R&D and capex is allocated to ICE improvements versus EV capabilities versus digital/connected technologies? How do you balance these competing investment needs while ensuring current business profitability?

Strategy for Supply Chain Resilience: What particular actions have you taken to ensure strategic material access, considering the vital role that supply chains for semiconductors and batteries play? For essential components, do you have any other supplier strategy except the conventional Tier-1 relationships?

Ocalization vs. Global Integration: How do you balance government localization mandates with the need for global scale and technology access? What is your strategy for managing the 50%+ local content requirements while maintaining quality and cost competitiveness?

Sustainability ROI Framework: Beyond compliance, how do you monetize sustainability investments? What specific business cases demonstrate that ESG initiatives generate measurable returns rather than just cost centers?

Technology Partnership Strategy: Given the rapid pace of automotive technology evolution, what is your approach to build-versus-buy decisions for critical technologies like autonomous driving, battery chemistry, and software platforms?

This comprehensive question framework would reveal management's strategic thinking depth, resource allocation priorities, risk management capabilities, and their realistic assessment of industry transformation challenges. The quality of responses would indicate whether leadership possesses the vision and execution capability necessary to navigate this unprecedented industry transformation successfully.