According to a report, jointly prepared by Automotive Component Manufacturing Association of India (ACMA) and consultancy firm Ernst & Young, the industry is expected to contribute 3.6 per cent of India's GDP by 2020 from the current level of 2.1 per cent.
"The Indian auto component industry can potentially grow to over Rs 500,000 crore (USD 110 billion) by 2020 driven in tandem with the surge in vehicle production in the country," the report -- 'Vision 20:20' said.
Out of the estimated turnover, domestic sector is expected to contribute about Rs 400,000 crore (USD 80 billion) while exports will stand at Rs 140,000 crore (USD 29 billion).
"To achieve this potential, the auto component industry would require investment of over Rs 160,000 crore (USD 35 billion) during the period," the report said, adding it would create an employment opportunity for over 10 lakh people.
The report said passenger vehicle sector will grow to about 90 lakh units while the commercial vehicle will cross 22 lakh units annually by 2020.
Currently, the passenger vehicle stands at around 20 lakh units while commercial vehicles is about to 5.3 lakh units.
"Two and three-wheelers are expected to double to 2.2 crore units by 2015 and reach 3 crore units by 2020 driven by low penetration level, expanding rural sales and growth in exports," the report said.
Commenting on the report, ACMA President Jayant Davar said: "India is well on its way to be among the top five vehicle producing countries in the world by 2020... The auto component industry is expected to grow almost four fold to over USD 110 billion from its current level of USD 26 billion."