Chennai: While the increased allocation for PLI schemes is a positive for the auto component industry, the sector may also see incremental demand from the Budget measures announced for non-auto segments. As component manufacturers have diversified beyond automobiles, newer opportunities are emerging across segments.“The Budget’s strong push on infrastructure creation, clean energy transition, and domestic manufacturing is likely to lift capacity utilisation across these adjacent segments, offering indirect growth opportunities for component makers,” said Ram Soni, Partner – Mobility, Energy and Transportation at Praxis Global Alliance.Over the last few years, several domestic auto component players have actively pursued non-auto revenue streams—such as industrial applications, aerospace, defence, railways and construction equipment—to insulate their business profiles from the expected rise in the penetration of alternative fuels, including EVs.More than 30% of organised auto component revenues now come from non-auto end markets such as railways, renewable energy, industrial equipment, and electronics, according to estimates by Praxis. For instance, the Rs.4425 crore Wheels India, a leading auto component manufacturer, now derives about one-fifth of its revenue from non-auto segments after diversifying into areas such as windmills and construction equipment.“With the Union Budget announcing proposals for many of these segments, industry players are likely to benefit. These include a focus on advanced manufacturing, high-value capital goods—such as tunnel boring machines, earthmoving equipment, and crane systems—and the development of seven high-speed rail corridors as growth connectors, said Srikumar Krishnamurthy, senior vice president and co-group head at ICRA. The proposed Scheme for the Construction and Infrastructure Equipment (CIE) industry, aimed at strengthening domestic manufacturing of high-value and technologically advanced equipment, is expected to be particularly positive for auto parts makers supplying to this sector. By supporting the development of a robust construction equipment ecosystem in India, the scheme is likely to drive incremental demand for players in this space.Vinnie Mehta, director general of ACMA, pointed out that while 80%–90% of industry revenues still come from the automotive sector, auto component makers are no longer restricted to it. They have diversified into multiple non-auto segments in search of new opportunities and risk mitigation. Reflecting this evolution, ACMA has created dedicated chapters for sectors such as aerospace, defence, and railways, among others.
