Modi government might allow 26% Chinese stake in electronics JVs
What's the story
The Indian government is considering a policy change, that may permit Chinese companies to own a minority stake of up to 26% in joint ventures (JVs) for certain critical electronics components.
The move is part of the Centre's plan to promote technology transfers through such partnerships, senior government officials and industry executives said to Moneycontrol.
The Chinese investment proposals will be evaluated on a case-to-case basis, and shall not be given blanket approval.
Investment trends
Chinese firms show interest in Indian electronics sector
Chinese firm Lianchuang Electronics, a key supplier of LCD display modules to OPPO, Vivo, and Samsung in India, is looking to enter the country's display, camera modules, and integrated circuit (IC) chipset manufacturing sectors.
The company's director Zhan Xianan has confirmed talks with Amber Electronics and Optiemus Electronics for the same.
This comes as China is increasingly open to conditions for investing in India, its next growth market.
Strategic planning
Indian firms prepare for ECMS
In light of the government's newly launched ₹22,919 crore Electronics Components Manufacturing Scheme (ECMS), Indian firms are putting the final touches on their plans to apply.
A portal with necessary guidelines was launched on April 26.
These companies have initiated discussions with electronics component manufacturers from China, Japan, South Korea, and Taiwan for potential collaborations under this scheme.
Global interest
Global electronics giants eye India's new scheme
Prominent Indian electronics companies including Dixon, Tata Electronics, Kaynes Technology, Micromax, Amber Enterprises, Munoth Industries, and the Murugappa Group have shown interest in ECMS.
International giants like Japan's TDK Corporation, Taiwan's Hon Hai Technology Group (Foxconn), Austria's AT&S Austria Technologie & Systemtechnik AG (AT&S AG), and Japan's Murata Manufacturing Co are also keen on the new scheme.
Minister's directive
Ashwini Vaishnaw has disclosed the rules
Union Minister Ashwini Vaishnaw has said any Foreign Direct Investment (FDI) will be approved as per the FDI Policy Circular 2020 without naming any specific country.
He said only companies with established design houses and those maintaining "Six Sigma" processes for high-quality products will be eligible for the scheme.
Industry executives have welcomed this directive, appreciating the focus on quality and design.