India's Auto-Component Firms Gear Up for Electronics Boom

India's auto-component firms are leveraging their precision manufacturing expertise to enter the fast-growing electronics sector, aiming to boost growth and market valuation. Government initiatives and global interest in India as a manufacturing hub present unique opportunities for these companies to expand beyond their traditional markets.

India's burgeoning electronics manufacturing sector is paving the way for new opportunities for auto-component companies, allowing them to capitalize on their precision manufacturing skills and global tech alliances, as highlighted by Jefferies.

Initially focused on automobile parts, these firms are now diversifying into electronics—a shift with the potential to significantly enhance their growth and market valuation.

The Indian electronics sector has seen impressive growth, with a compound annual growth rate (CAGR) of 15% between FY16 and FY24, reaching USD 115 billion. The government aims to quadruple this to USD 500 billion by FY31, highlighting its strategic importance.

Despite growth, local value addition remains low at 18-20%, due to dependency on imported components. However, the expansion of auto-component providers into electronics is promising.

India's auto industry has already made a mark internationally, as demonstrated by USD 21 billion in auto-component exports in FY24. The government intends to increase this to 35% by 2030, spurred by domestic production and foreign investment.

India's expertise in semiconductor design and electronics assembly is strong, yet high-value component manufacturing needs development. Auto-component firms, proficient in precision manufacturing, are well-poised to tap into this sector.

These firms could be pivotal in bolstering India's electronics ecosystem, offering new revenue streams and enhancing valuation. With global supply chains evolving, India's role as a key player in electronics offers a distinct advantage for these companies.

The government's domestic production push and rising global interest in India as a manufacturing alternative to China present a unique opportunity. If more firms venture into electronics, it could signal a major industrial shift, strengthening India's global electronics supply chain position. (ANI)

(With inputs from agencies.)