McKinsey-ACMA Study Maps India Auto Sector's Net-Zero Pathway

A McKinsey study for the Automotive Component Manufacturers Association of India found the auto and auto-ancillaries sector, contributing 2.1% of GDP and 1.4% of national greenhouse gas emissions, must decarbonize across its value chain to support India's 2070 net-zero goal. The report ties competitiveness for Indian OEMs and suppliers directly to BRSR disclosure and Scope 3 emission targets.

The McKinsey study for ACMA, titled 'Mobility 360° – Sustainability for Competitiveness,' notes the automotive sector contributes 2.1% of India's GDP, employs 5 million people, accounts for 4.5% of merchandise exports and produces 1.4% of national greenhouse gas emissions. Roughly 900 sustainability policies now exist versus around 100 in the early 2000s, including SEBI's BRSR mandating ESG disclosure for listed companies. Over 180 Indian companies have committed to Science Based Targets initiative-verified decarbonization, and sustainability funds grew at 120% CAGR between 2019 and 2021.

Original equipment manufacturers and auto-ancillary suppliers are directly affected, facing pressure to cut Scope 1 and 2 emissions and extend Scope 3 upstream targets to suppliers. The report flags rising value-chain emissions from electrification materials such as aluminium and battery-active materials, even as EV adoption lowers use-phase emissions. With Indian grid power projected to remain about 57% coal-based by 2030, suppliers face energy-decarbonization and material-circularity decisions affecting EBITDA, valuation and export competitiveness.

Companies should pursue energy decarbonization via rooftop solar and variable frequency drives, and material circularity through recycling, refurbishing and repair, which the study estimates can raise revenues 10–20%, cut costs 5–10% and reduce carbon emissions 50–70%. OEMs should set decarbonization targets and support suppliers on component-level Scope 3 goals. Firms should monitor strengthening reporting regulations and circular-economy policy, while addressing barriers like unorganized recyclers, high costs and low e-waste recovery rates highlighted in the report.

Key figure — Sector emissions share: 1.4% of India's annual greenhouse gas emissions