Auto component manufacturers and tyre makers are making the first quiet moves into an uncharted area -- components for aircraft manufacturers.

Cashing in on the low cost of skilled labour, a clutch of companies like Maini Precision Products, MRF Tyres, Pune-based Minda NTS, and Sundram Fasteners [Get Quote] are taking the first tentative steps to supply to the big world of aviation.

Last week, US aircraft manufacturer Boeing signed an agreement with Tata Automobile Limited Manufacturing Solutions, a wholly-owned Tata Motors [Get Quote] subsidiary, for manufacturing structural components for Boeing's 787 Dreamliner airplane programme.

"We are looking at partnerships with various Indian companies for different aircraft components. So watch this space," said Ian Thomas, president, Boeing India.

Meanwhile, MRF, India's largest tyre manufacturer, has taken the first step by making tyres for helicopters used by the defence services.

"Entering the aviation space is definitely an opportunity. Our tyres for helicopters are undergoing tests and validation. No specific investments have been made for this foray, as this is part of our overall expansion plan," said Koshy K Varghese, executive vice-president, marketing.

Similarly, lighting manufacturer Lumax Industries [Get Quote] is conducting a feasibility study on the market for aircraft lighting.

"We would prefer technology tie-ups with established players in mature markets in the aviation space who could leverage our competency to supply aircraft lighting," said Deepak Jain, executive director, Lumax Industries Ltd.

The key reason for global manufacturers to look at India is the large "labour arbitrage" that reduces overall aircraft manufacturing costs, he added.

Pune-based auto component manufacturer Ashok Minda Group's has tied up with Australia's NTS Tooling to set up a venture that will be operational in two or three months.

The company is unwilling to share details of the tie-up. But a spokesperson said, "The new facility, apart from providing services in design and manufacture of high-quality precision tooling for the automotive industry, will cater to the aerospace and defence sectors." NTS has two decades of experience in these sectors.

Auto component manufacturers Sundram Fasteners is also looking at the aviation market pretty seriously. "The aviation industry uses tonnes of fasteners, which could be the next area of growth. Being suppliers of fasteners to leading auto majors in the world, it would be a logical progression for us to manufacture fasteners for the aircraft industry," said Suresh Krishna, chairman and managing director, Sundram Fasteners.

Maini Precision Products, part of Maini Group, is already planning to manufacture aircraft material parts but again, is unwilling to discuss details.

"There is a large market for Indian companies in aerospace, especially in manufacturing mechanical, electrical, electronics and composites. There is large scope for design services businesses too," said group Deputy Chairman Chetan Maini.

For Indian auto manufacturers getting into the aviation space has many advantages. Industry experts said gross profit margins in auto ancillaries are 10 to 12 per cent, but for the aviation space they are far higher.

Says an analyst who has followed the industry: "Obviously you hedge your bets as you are no longer dependent on the fortunes of only one industry."

The market is also large. By one estimate, there will be 24,300 aircraft in the world by 2026, with Asia registering the fastest growth.

Analysts estimate that as much as 90 per cent of the Boeing 787 Dreamliner has been outsourced to an international network of fabricators, while 50 per cent of the Airbus' A350 will be farmed out, a pointer to the potential market.