Leading consumer electronics contract manufacturers are foraying into auto parts manufacturing to tap this growing opportunity. Also, existing auto parts makers are chasing business diversifications encouraged by government incentives and driven by the need to utilise their capacities fully.

Top executives of consumer electronics makers such as Dixon Technologies, Amber Enterprises and Epack Durables said they will enter the automotive industry with products such as automotive displays, printed circuit board (PCB) and printed circuit board assembly (PCBA), since these can be produced in their existing or planned component manufacturing lines. The plans also found mention at company’s investor calls in the past few days.

Auto parts makers such as Lumax Industries, Uno Minda and Hella India Automotive have been selected for the third round of white goods production-linked incentive (PLI) scheme where they will be producing components for LED lights.

Dixon managing director Atul Lall told analysts the company wants to start making automotive displays for which it is in talks for a partnership. The products will be rolled out from a display fab the company plans to set up with an investment of USD 2.7-3 billion. The fab will produce displays for electronics.

India’s largest contract AC manufacturer Amber Enterprises chief executive officer Jasbir Singh said the company is supplying PCB applications and assembly boards to four- and two-wheeler makers. “So, there is a cross deployment of customers in both PCBA and PCB. And I believe we will be able to do that,” he told analysts.

To be sure, several components such as LED lights and its subcomponents, PCB and PCBA, displays, sensors, BLDC motors, battery cells and semiconductors common to electronic products and automobiles are driving this diversification with both industries pursuing increased localisation.

“The two industries, electronics and automobiles, are using parts and components that are common to both,” said Hemal Thakkar, director at Crisil Intelligence. “Both being sunrise sectors, the initial volumes will be low. Hence, it makes sense to have a diversified customer base,” he said.

Appliance contract manufacturer Epack Durable MD Ajay DD Singhania said the company would tap automotive clients for PCBA components to utilise spare capacity after its captive consumption and supplying to other electronic companies. “It would help to justify the investment to set up these lines especially when for seasonal products like AC, the capacity utilisation is not always high,” he said.

Most of the large electronic contract manufacturers have already started component production, including sub-assemblies of a component. The government is also likely to soon announce a PLI scheme for electronic components.

Sunil Bohra, chief financial officer at Uno Minda confirmed the company got approval as part of the PLI for white goods.