There has been much debate over the best method of accounting for the costs incurred by Indias manufacturing sector, particularly the sectors devoted to the mechanical processing of goods. However, it is widely accepted that many small and medium-sized enterprises (SMEs) in the Automotive Engineering industry continue to use outdated costing methods because they lack access to modern resources and training. In their review of the existing literature, the authors identified a need for further investigation into the challenges faced by the small and medium-sized enterprises (SMEs) in Indias Automotive Engineering Industry when adopting the ABC costing approach. The ubiquity of SMEs, especially those involved in the automotive engineering industry, gives this study great importance for offering practical advice.