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India is weighing a proposal to allow Chinese companies to hold up to 26% equity in joint ventures for specific, critical electronics components
Electronics Components
India is weighing a proposal to allow Chinese companies to hold up to 26% equity in joint ventures for specific, critical electronics components, while maintaining a stricter 10% cap for most other segments, according to a Moneycontrol.com report.
The matter was discussed during meetings last week between government officials and domestic electronics manufacturers. According to Moneycontrol, the government conveyed that Chinese investment proposals will be considered on a case-by-case basis, rather than granting blanket approvals.
“While the government is inclined to permit a minority stake by Chinese firms in new joint ventures, it may allow up to 26% in certain key component categories. However, it reiterated that general approvals are off the table,” a top executive familiar with the discussions told Moneycontrol.
The government is also seeking technology transfer through these partnerships, recognizing that India currently lacks the necessary know-how and that the local ecosystem for electronics components is still in its formative phase.
Sources cited by Moneycontrol said that Chinese firms are increasingly open to Indian investment conditions, viewing India as a key growth market, particularly in light of ongoing trade tensions with the United States that risk pricing their products out of the American market.
In a key development, Lianchuang Electronics, a Chinese supplier that counts Oppo, Vivo, and Samsung among its clients in India, is in talks with Amber Electronics and Optiemus Electronics to enter the display, camera module, and IC chipset manufacturing space, the company’s Director and General Manager Zhan Xianan told Moneycontrol exclusively.
Lianchuang is notably the first Chinese firm to express formal interest in India’s newly launched Rs 22,919-crore Electronics Components Manufacturing Scheme (ECMS), the report said.
Meanwhile, Indian companies are preparing to apply for the scheme following the launch of its official portal and guidelines on April 26. Discussions have also started between Indian players and electronics firms from China, Japan, South Korea, and Taiwan, as they look to form strategic joint ventures.
“Last week, we met government officials for clarity on Chinese investments. While the government is open to it, the case-by-case nature of approvals has created some ambiguity,” said another senior industry executive, on the condition of anonymity. “We plan to engage with Chinese vendors who are already validated by global brands, as getting new suppliers certified could take years.”
Leading Indian electronics manufacturers such as Dixon Technologies, Tata Electronics, Kaynes Technology, Micromax, Amber Enterprises, Optiemus Electronics, Syrma SGS, Munoth Industries, and the Murugappa Group have expressed interest in participating in ECMS, Moneycontrol reported.
Global players like Japan’s TDK Corporation, Taiwan’s Hon Hai (Foxconn), China’s Lianchuang, Austria’s AT&S, and Japan’s Murata Manufacturing Co are also eyeing the scheme as a way to expand their manufacturing footprint in India.
Union IT and Communications Minister Ashwini Vaishnaw recently commented that all Foreign Direct Investment (FDI) will be processed under the FDI Policy Circular 2020, without naming any specific country. He also emphasized that companies applying under ECMS must have established design houses and adhere to Six Sigma standards to ensure product quality.
The minister’s quality-centric directive has been welcomed by industry leaders. Atul Lall, CEO of Dixon Technologies and President of industry body ELCINA, told Moneycontrol, “This focus on Six Sigma and local design teams is an excellent step toward building indigenous IP and strengthening India’s component manufacturing ecosystem.”
Ashok Chandak, President of the India Electronics and Semiconductor Association and Semi India, echoed that sentiment. He told Moneycontrol that promoting design capabilities will offer India a long-term competitive edge. “Without in-house design control, local firms can’t innovate or serve domestic needs effectively. Successful global companies are design-led, and India should aim for the same,” he said. However, Chandak cautioned that achieving Six Sigma levels could pose challenges for smaller players in the sector.
