Aequs Ltd: Budget 2026 Boosts Aerospace and Electronics Arms

Introduction: A Tailor-Made Budget for Precision Manufacturing

The Union Budget 2026, presented by the Finance Minister, has laid out a clear roadmap focused on bolstering domestic manufacturing, particularly in strategic sectors like capital goods, aerospace, and electronics. For Aequs Ltd., a diversified contract manufacturer with a strong foothold in both aerospace and consumer electronics, the budget announcements provide significant policy tailwinds. Key proposals, including customs duty exemptions for the aviation sector, an expanded Production Linked Incentive (PLI) scheme for electronics, and operational flexibility for SEZ units, directly address the company's core business verticals and strategic growth areas.

Direct Boost for the Core Aerospace Division

Aequs derives nearly 89% of its revenue from its aerospace division, supplying critical components to global giants like Airbus and Boeing. The Union Budget 2026 has introduced measures that will directly enhance the competitiveness of this segment. The proposal to exempt basic customs duty on components, parts, and raw materials required for the manufacture of civilian aircraft is a major positive. This move will lower the input costs for Aequs, potentially improving its operating margins and strengthening its position against global competitors. Furthermore, the budget also proposes duty exemptions on raw materials for Maintenance, Repair, and Overhaul (MRO) activities, which aligns perfectly with Aequs's stated ambition to establish its own MRO facility.

Expanded Electronics PLI Scheme Fuels Diversification

While aerospace remains its primary focus, Aequs has been diversifying into consumer goods, including electronics. The budget's proposal to increase the outlay for the electronics components manufacturing scheme to ₹40,000 crores is a significant catalyst for this division. Aequs has previously indicated its intent to leverage PLI schemes to grow its electronics manufacturing services. This enhanced financial incentive from the government will support the company's plans for capacity expansion, help attract new clients, and accelerate the path to profitability for its non-aerospace businesses, which have historically been a drag on overall financial performance.

SEZ Policy Relaxation Unlocks Domestic Market Access

Aequs operates out of a Special Economic Zone (SEZ) in Belagavi, Karnataka, which is central to its vertically integrated manufacturing model. The budget announced a special one-time measure to facilitate sales by manufacturing units in SEZs to the Domestic Tariff Area (DTA) at a concessional duty rate of 2%. This provides Aequs with crucial operational flexibility. It allows the company to tap into the large Indian domestic market more effectively, which can help improve capacity utilization, especially in its consumer goods division, and create a new revenue stream that was previously less viable due to higher duty structures.

Table: Key Budget 2026 Announcements for Aequs Ltd.

Strengthening the Capital Goods Ecosystem

The budget's overarching emphasis on strengthening capital goods manufacturing creates a favorable environment for Aequs. The proposed increase in public capital expenditure to ₹12.2 lakh crores, along with initiatives to establish high-tech tool rooms, will drive demand and foster a more robust domestic supply chain. As a leading precision engineering firm, Aequs stands to benefit from a stronger ecosystem that encourages innovation, skill development, and technological advancement in manufacturing.

Investor Outlook and Path to Profitability

For Aequs, which recently concluded a heavily oversubscribed IPO but continues to post net losses, the budget measures are critically important. The policy support directly addresses key operational challenges by reducing costs and opening up new revenue opportunities. This government backing validates the company's business model and could significantly improve investor sentiment. The combination of lower input costs for its profitable aerospace division and incentives for its growing electronics arm provides a clearer and more supported path toward achieving sustainable profitability.

Conclusion: A Strategic Alignment with National Priorities

The Union Budget 2026 aligns strategically with Aequs Ltd.'s business model. The targeted support for aerospace, electronics manufacturing, and SEZ-based operations provides a multi-pronged boost to the company. These measures are expected to enhance cost competitiveness, fuel diversification efforts, and provide greater market access. As these policies are implemented, Aequs is well-positioned to leverage them for its long-term growth and its journey towards becoming a profitable, global-scale manufacturing champion.