Auto Component for OEM (Brakes) Project Report: Industry Trends, Plant Setup, Machinery, Raw Materials, Investment Opportunities, Cost and Revenue

Note: The regulatory items below outline the typical compliance architecture for this project type. Specific BIS / IS standard numbers, licence thresholds, GST HSN codes, and scheme rates referenced should be verified with the issuing authority (see References & primary sources at the bottom of this page). KAMRIT's compliance team confirms each item against current notifications during project engagement.

Auto component for oem (brakes) projects in India take a baseline set of central and state approvals layered with the sector-specific BIS / EIA / PLI overlay. For ₹29.3 crore - ₹261 crore project size, the touchpoints KAMRIT covers are:

• BIS certification for products on the mandatory certification list
• Environmental clearance under EIA 2006 (Schedule 8, project capacity threshold)
• PLI participation across 14 schemes where the project qualifies
• Hazardous waste authorisation under Hazardous Waste Rules 2016
• Import-Export Code (IEC) and DGFT Star Export House registration for export-led units
• EPF (20+ employees), ESI (10+ employees and ₹21k wage threshold), PT, Shops Act

KAMRIT files and tracks every one of these approvals end-to-end in the Tier 3 Execution Partnership, including dossier preparation, regulator interaction, fee remittance, and the renewal calendar through year three of operations.

<p>The auto component sector is structured across a multi-tier supply chain comprising Tier-1, Tier-2, and Tier-3 suppliers feeding directly into OEM assembly lines. The OEM segment commands approximately 60% to 66% of the total auto component market, while OEM Component Sales reached USD 67.9 billion in FY2024-25, growing at 10% year-on-year. This underscores the outsized importance of the OEM channel as the primary revenue driver for any new brakes plant entering the Indian market.</p><p>The suspension and braking segment accounts for approximately 13% to 15% of total auto component production in India, making it one of the most significant sub-sectors by revenue contribution.

Within the global brake components market, the brake pad segment alone commands a 29% share of total braking component production as of 2025. The OEM channel further dominates the brake components market globally, representing 72.4% of total brake component sales in 2026, confirming that the OEM segment is the critical addressable market for any new manufacturing entrant.</p><p>The industry is represented by the Automotive Component Manufacturers Association of India (ACMA), which represents over 1,155 member companies accounting for more than 85% of the organized auto component sector's turnover. The Society of Indian Automobile Manufacturers (SIAM) represents vehicle manufacturers, while the Automotive Research Association of India (ARAI) and NATRiP (National Automotive Testing and R&D Infrastructure Project) provide testing and homologation infrastructure.

Regional industrial clusters are concentrated in the Southern Hub along the Chennai-Bengaluru-Hosur corridor, where Brakes India Private Limited, Bosch Ltd., and Endurance Technologies Limited maintain major plants at locations including Padi, Mahindra World City (Chengalpattu), Sri City, Naidupet, and Bengaluru.</p>

Project-specific demand drivers

• Auto PLI scheme
• EV transition acceleration
• Localisation of imported components
• Two-wheeler electrification
• Commercial vehicle BS-VII compliance
• Aftermarket organised play growth

<p>Brake-by-Wire (BBW) technology represents the most significant technological transformation in the braking industry, involving the integration of electro-mechanical braking (EMB) and electro-hydraulic systems that replace traditional mechanical linkages with electronic controls. Continental AG's MK C1 system is cited as a leading example of such electro-hydraulic integration, and manufacturers investing in BBW capability will be positioned favorably as OEMs accelerate adoption across new vehicle platforms.</p><p>Manufacturing precision requirements are exceptionally demanding in the brakes sector. Thermal-induced thickness variation must be maintained within plus or minus 0.05 mm during CNC turning of brake discs and calipers.

Aluminum caliper strength must be maintained at or above 350 MPa while simultaneously targeting a 30% weight reduction, presenting a challenging materials engineering requirement. Seal groove tolerances are restricted to plus or minus 0.015 mm to prevent fluid leakage and safety-critical failures. Severe tool wear caused by the abrasive nature of friction materials adds further complexity to manufacturing economics.</p><p>Innovation milestones achieved by Brakes India illustrate the technology trajectory of the sector.

The company introduced localized Electric Parking Brakes (EPB) in India in 2017, and in partnership with Japan-based ADVICS (a joint venture between Aisin Seiki and Sumitomo Electric), has developed advanced braking systems including Electronic Stability Control (ESC) for the light vehicle market. The joint venture, with Brakes India holding a 51% stake and ADVICS holding 49%, involves a planned investment of INR 500 crore and is located near Hosur, Tamil Nadu, with over 300 people employed. Meanwhile, ZF Rane Automotive India launched advanced Electric Power Steering (EPS) systems in January 2025, signaling broader electrification trends across vehicle dynamics systems that intersect with brake-by-wire platforms.</p>

The proposed project capex range of ₹29.3 crore to ₹261 crore encompasses a scale pathway from a single-product focused line targeting two-wheeler brake shoes to a multi-product campus serving passenger vehicle, commercial vehicle, and EV brake system requirements. KAMRIT Financial Services LLP recommends a phased capex deployment starting with ₹45-60 crore initial phase covering CNC machining for disc brake rotors and drum brake assemblies with ₹12 crore working capital buffer. Financing structure should target 70:30 debt-to-equity for the initial phase, moving to 60:40 for subsequent expansions as asset tangibility supports enhanced leverage. State Bank of India and HDFC Bank have demonstrated appetite for automotive tier-1 supplier financing with dedicated MSME auto desk coverage, offering term loans at 9.5-11% based on ITR and banking track record. SIDBI's auto component cluster scheme offers specialised refinance at 50-100 basis points below market rates for units located in notified clusters like Pithampur or Sanand. The Auto PLI scheme under ₹5.95 lakh crore production linked incentive programme offers incremental revenue incentive at 5-8% for components achieving 50%+ local content, directly enhancing project IRR by 2-3 percentage points. Working capital assessment for OEM brake suppliers must account for 45-60 day receivable cycles against OEM buyers versus 15-20 day payable cycles to raw material suppliers, creating a ₹18-25 crore working capital requirement for a ₹80 crore revenue scale facility. CGTMSE-backed collateral-free working capital limits from SIDBI and public sector bank correspondents can address 40-50% of this gap.

<p>Import competition remains a persistent structural risk. Total auto component imports reached USD 22.4 billion in FY2024-25, a 7.3% increase year-on-year, driven by imports from Asia, Europe, and North America that include suspension and braking systems. This indicates that domestic OEMs continue to source significant quantities of braking components from established global suppliers, creating headwinds for new domestic entrants competing on technology pedigree and OEM relationship depth.</p><p>The technological shift toward Brake-by-Wire and electric vehicle platforms introduces obsolescence risk for manufacturers heavily invested in conventional hydraulic and mechanical braking systems.

As Electro-Mechanical Braking (EMB) and electro-hydraulic systems like Continental AG's MK C1 displace traditional architectures, manufacturers without the R&D investment or technology licensing to transition face margin compression and potential demand loss. Euro 7 regulations, effective from November 2026 for passenger cars, impose new particulate matter emission limits from brakes, requiring advanced material formulations and manufacturing processes that may entail additional capital investment.</p><p>Raw material cost volatility presents a significant margin risk. Primary material inputs for brake manufacturing include grey iron and ductile iron for rotors, phenolic resins for friction materials, and aluminum alloys for calipers.

Fluctuations in global commodity prices for iron ore, aluminum, and petrochemical-based resins can compress margins, particularly for manufacturers without long-term supply contracts or backward integration into raw material supply.</p><p>Regulatory compliance costs are substantial and rising. Type Approval Certification under CMVR Rule 126, BIS quality standards, ARAI homologation testing, and the impending Euro 7 particulate matter regulations each require dedicated engineering resources, testing infrastructure, and certification expenditure. For new entrants, the compliance investment before generating first OEM revenues is a significant cash flow burden.

Additionally, the GST rate of 18% on brake components, while uniform, adds to the landed cost structure that must be carefully managed against international competitors.</p><p>Labor and operations risks include the need to maintain exceptionally tight manufacturing tolerances, with seal groove tolerances restricted to plus or minus 0.015 mm and thermal-induced thickness variation controlled within plus or minus 0.05 mm. Severe tool wear from abrasive friction materials compounds maintenance costs and downtime. The competitive talent market for precision manufacturing engineers in established clusters like Chennai and Hosur, where Brakes India, Bosch, and ADVICS already maintain large workforces, adds to recruitment and retention challenges for new facilities.