Problem: While India’s auto component supply to OEMs reached ₹6.63 lakh crore in FY26, continued reliance on Chinese imports, especially for EV components, highlight a crucial capability gap in vehicle electronics and embedded software. Although MSMEs make up 80% of the supplier base, fewer than 14% have systems integration capabilities. Squeezed by high inventory, delayed cash receipts, and narrow EBITDA margins, 90% of MSMEs lack the financial liquidity and risk tolerance to invest consistently in next-generation technologies.   Solution: Unlocking the capability flywheel requires three coordinated levers: shifting from forecast-driven schedules to consumption-based pull replenishment to insulate shop floors from demand swings; consolidating supplier volumes and eliminating operational constraints to reclaim lost plant capacity; and reinvesting the resulting recurring cash surplus-alongside external capital and OEM partnerships-into dedicated R&D and advanced engineering units.   Benefits: Optimising operational flow releases ₹4,000-₹5,600 crore in trapped working capital across auto MSMEs by cutting inventory by 30%-40%. Reclaiming 15%-30% productivity from existing equipment generates an incremental ₹29,000-₹44,000 crore value pool, building a self-funding growth engine for India's automotive future.

Key Takeaways

Building a future-ready automotive supply ecosystem

The broken flywheel

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Learn how fixing the operational flywheel unlocks ₹5,600 Cr of working capital and an ₹88,000 Cr auto component growth pool in India.