Schaeffler India Capex Plan 2026 Localization Export Growth Outlook

During its first quarter earnings discussion for CY26, Schaeffler India outlined a capital expenditure plan ranging between INR 400 crore and INR 500 crore for the 2026 calendar year. The company continues to advance its localization strategy, achieving an overall localization level of 80 percent in the first quarter. This strategic direction is aligned with its long-term goal of reducing dependency on imports while strengthening domestic manufacturing capabilities across both automotive and industrial segments.

Localization Strategy and Supply Chain Focus

While overall localization remains strong, the industrial segment currently stands at approximately 60 percent localization, indicating significant headroom for further domestic sourcing. The company is actively working to localize its e-axle supply chain, which currently depends heavily on imports from China to maintain cost competitiveness. Increasing local sourcing is expected to enhance supply chain resilience while reducing exposure to global disruptions and currency fluctuations.

Industrial Segment Performance Challenges

The industrial division reported a 14 percent quarter-on-quarter revenue decline in Q1 CY26, although it maintained a 6 percent year-on-year growth. The sequential decline was attributed to multiple factors including intensified market competition, demand slowdown in specific sub-sectors, temporary liquidity constraints within the industrial aftermarket, and ongoing supply chain disruptions. Despite these challenges, the company remains optimistic about medium-term recovery supported by demand normalization and operational adjustments.

Financial Performance and Cash Flow Trends

Free cash flow for the quarter stood at INR 140 crore, compared to INR 240 crore in the same period last year. The decline was primarily driven by increased working capital requirements as the Automotive Technologies division scaled up to meet rising demand. This reflects a strategic allocation of resources to support growth, even though it temporarily impacts short-term liquidity metrics.

Export Growth Outlook and Global Markets

Schaeffler India expects its export business to grow by 10 to 12 percent in CY26, with key markets including Europe, China, Southeast Asia, and the Americas. Analysts anticipate sustained double-digit revenue growth driven by new order inflows and an expanding presence in the aftermarket segment. The company also highlighted that increases in input costs are typically passed on to customers with a time lag ranging between six and 18 months, ensuring margin protection over the long term.

Frequently Asked Questions

What is Schaeffler India’s capital expenditure plan for 2026?
Schaeffler India plans to invest between INR 400 crore and INR 500 crore in capital expenditures during the 2026 calendar year to support growth and localization. This investment will primarily focus on strengthening domestic manufacturing capabilities, improving supply chain resilience, and expanding automotive and industrial segment operations. The company aims to reduce reliance on imports while enhancing competitiveness in both domestic and global markets through this strategic capital allocation.

Why is localization important for Schaeffler India’s strategy?
Localization is critical for Schaeffler India as it helps reduce dependency on imports, lowers costs, and improves supply chain stability amid global disruptions. By increasing local sourcing, especially in areas like e-axle components, the company can enhance operational efficiency and respond faster to market demands. Additionally, higher localization supports long-term competitiveness, aligns with government initiatives, and strengthens the company’s position in both domestic and export markets.