Schaeffler to invest €500 million in India, opens fifth plant in Tamil Nadu

German firm Schaeffler will invest €500 million in India over five years to grow EV, rail, and renewable businesses and deepen localisation amid global shifts

German automotive and industrial supplier Schaeffler AG will invest 500 million euros (approximately ₹4,800 crore) in India over the next five years, anticipating growing demand in the local market.

 

The investment will focus on expanding production capacity, increasing localisation, and strengthening the company’s presence in electric mobility, railways, and renewable energy component manufacturing, Schaeffler AG chief executive officer (CEO) Klaus Rosenfeld announced here on Wednesday.

 

Company executives outlined plans for the Indian market, which, they said, continues to present opportunities despite a flattening global automotive demand.

 

On the ongoing global trade war, Rosenfeld said the world is gradually becoming multi-polar, where the idea of free trade is increasingly challenged. “Tariffs and non-tariff barriers are no longer exceptions —they’re part of the reality, even in Europe. If all this noise leads to a renewed understanding of why free trade matters, that would be positive, but I’m not sure we’re headed that way. For global companies like us, this means doubling down on localisation, investing not just financial capital but also human capital. In this context, India plays a critical role. It has proven to be a reliable partner amid global uncertainty. With the FTA (free trade agreement) conversations underway with the EU and the UK, and India’s growing economic stature, its strategic importance will only rise,” he said.

 

On the Indian car market, Rosenfeld said the country has the potential to go from 4 million to 8 million units of passenger vehicles (PVs). "The issue is not demand, but infrastructure and sustainability constraints," he said.

 

The Indian listed company, Schaeffler India, which has revenue of close to a billion dollars a year, is currently undergoing a merger with Vitesco Technologies group as part of global merger and is expected to more than double its size in India to ₹20,000 crore in terms of revenue.

 

The announcement comes alongside the inauguration of the company’s fifth manufacturing facility in Shoolagiri, Tamil Nadu, for an investment of 35 million euros (approximately ₹340 crore), focused on powertrain and chassis components for conventional and electric vehicles (EVs).

 

The Shoolagiri plant, located on a 108,000 square metre (sqm) plot, will begin operations with Phase-I spanning 16,500 sqm expected to reach full production by the fourth quarter of calendar year 2025 (Q4CY25). The facility will manufacture planetary gear systems, hybrid transmission components, and other drivetrain parts, targeting the Indian market. 

 

The company will direct part of the investment into building components for electric two-wheelers (e2Ws), battery and hybrid EVs, and commercial vehicles (CVs). Schaeffler also plans to expand its product range in the railway sector, where it currently supplies axle box bearings, fairings, airboxes, and monitoring solutions for locomotives and wagons.

 

“Speed and axle load capacities are rising in Indian Railways. Our products are undergoing validation for the next generation of trains,” said Harsha Kadam, managing director (MD) and CEO, Schaeffler India.

 

Schaeffler said its current localisation rate in India is 76 per cent, and the company aims to raise this further. Components for wind turbine systems — currently imported — are among the areas it plans to start manufacturing domestically. The company sees potential across multiple industrial sectors and intends to expand accordingly.

 

Schaeffler projects that by 2030, globally 30 per cent of vehicles will be fully electric, 35 per cent hybrid, and the remaining internal combustion engine (ICE)-based. Company executives said India's EV transition would follow a different trajectory compared to markets like China.

 

Asked about growth prospects, Rosenfeld said global vehicle production is unlikely to return to earlier peaks of 120 million units per year, and is expected to remain around 88 million units, due to structural pressures and tariff impacts.

 

Schaeffler also plans to establish a global capability centre (GCC) in India to support engineering, digital, and information technology (IT) functions. On the role of artificial intelligence and machine learning (AI/ML), Rosenfeld said the technologies would be selectively applied, especially in repetitive or transactional processes, but not as replacements for large-scale manufacturing systems.

 

"Applying AI requires systems that support implementation. It’s not a plug-and-play solution,” he said.