Auto parts makers like Motherson, Bharat Forge pivoting to electronics manufacturing, says Jefferies

Motherson Group and Bharat Forge are benefitting from rising electronics manufacturing in India, global investment banking and capital markets firm Jefferies said in a report.

The firm added that Apple's global supplier list shows an intersection of electronics and auto manufacturing with companies like Alps Alpine, AGC, Bosch, Minebea Mitsumi, Nidec, Sumitomo Electric, and Toyoda Gosei.

Jefferies highlighted the Indian government's efforts to enhance domestic production of electronics products.

"The government has embarked on a path to promote domestic manufacturing. India's electronics production grew at 15% CAGR over FY16-24 to $115 billion and the government has set a target to quadruple this to $500 billion by FY31," Jefferies said.

"While India has extensive chip design talent and electronics assembly has picked up, value addition is low at 18-20%, which the government intends to raise to 35% by 2030," Jefferies added.

India's excellence in making auto parts

India’s auto industry has emerged as a remarkable success story, driven by prudent policies and rising demand. While the country struggled to attract global auto OEMs in the early 1980s, it is now the fourth-largest auto producer globally, exporting both vehicles and components, Jefferies said.

The backbone of India’s auto manufacturing success lies in its component makers, who have forged technology collaborations with global suppliers, expanded production capacities and achieved manufacturing excellence in a complex supply chain. These suppliers not only cater to domestic automakers but also export auto components worldwide, with exports reaching $21 billion in FY24. Leading companies like Motherson have established manufacturing plants across Europe, US, and Asia, serving major global OEMs, Jefferies added.

In the backdrop of these developments, Jefferies highlighted how Motherson and Bharat Forge are entering the electronics manufacturing space. Motherson has formed a joint venture agreement with Hong Kong-based BIEL Crystal investing ₹2,600 crore for glass manufacturing for consumer electronics. Its first facility became operational in the December quarter and two more plants are expected to start production in the financial year 2026 and 2027.

Meanwhile, Bharat Forge has partnered with AMD and Taiwan-based Compal Electronics to manufacture servers in India using its existing surface-mount technology (SMT) facility.