India is reportedly considering limiting Chinese companies to a 10% equity stake in electronics joint ventures, contingent on technology transfer due to a lack of local expertise, sources told ET. According to a report in the Economic Times, India may restrict Chinese companies to a 10% equity stake in electronics joint ventures, conditional on technology transfer due to limited local expertise.
"As the Indian firms need technology transfer, the government is likely to allow 10% Chinese equity in joint ventures. But there won't be open gates for Chinese investments in electronics or other sectors," a source told the publication. This follows Chinese companies' growing willingness to meet India’s terms to expand in the market, amid U.S. tariff pressures increasing their product costs.
The report said that the government prefers Chinese contract manufacturers or supply chain firms over brands to strengthen India’s manufacturing ecosystem. Flexibility on equity limits may be offered if U.S. or European firms relocate from China to India, with Chinese suppliers potentially holding up to 49% stakes in exceptional, case-by-case approvals, officials told ET.
India’s caution stems from suspected Chinese supply chain disruptions in drilling machines, solar panel equipment, and electronics, worsened by strained ties since the 2020 border clashes. "The drilling machines are made by German companies but since they have supply chains in China, the same are being throttled," an industry executive told ET, noting similar issues in electronics equipment.
To avoid replicating Vietnam’s Chinese-dominated electronics sector, India is limiting broad Chinese investment.
So far, none of the U.S. manufacturers have reportedly yet proposed shifting Chinese suppliers to India, with companies likely assessing geopolitical developments. India is also encouraging its companies to target the U.S. market, ahead of an expected India-U.S. bilateral trade agreement later this year.
While open to Chinese suppliers in Apple’s ecosystem, Apple has prioritized Indian firms, supported by Taiwanese and Japanese suppliers. Tata Electronics, for instance, now produces iPhone enclosures locally for export, excluding iPads. Apple’s expanding Indian supplier base, including Motherson Group, Jabil, Aequs, Tata Electronics, Sunwoda, Foxlink, Salcomp, and Bharat Forge, reflects its shift away from China, boosting local value addition.
"As the Indian firms need technology transfer, the government is likely to allow 10% Chinese equity in joint ventures. But there won't be open gates for Chinese investments in electronics or other sectors," a source told the publication. This follows Chinese companies' growing willingness to meet India’s terms to expand in the market, amid U.S. tariff pressures increasing their product costs.
The report said that the government prefers Chinese contract manufacturers or supply chain firms over brands to strengthen India’s manufacturing ecosystem. Flexibility on equity limits may be offered if U.S. or European firms relocate from China to India, with Chinese suppliers potentially holding up to 49% stakes in exceptional, case-by-case approvals, officials told ET.
India’s caution stems from suspected Chinese supply chain disruptions in drilling machines, solar panel equipment, and electronics, worsened by strained ties since the 2020 border clashes. "The drilling machines are made by German companies but since they have supply chains in China, the same are being throttled," an industry executive told ET, noting similar issues in electronics equipment.
To avoid replicating Vietnam’s Chinese-dominated electronics sector, India is limiting broad Chinese investment.
So far, none of the U.S. manufacturers have reportedly yet proposed shifting Chinese suppliers to India, with companies likely assessing geopolitical developments. India is also encouraging its companies to target the U.S. market, ahead of an expected India-U.S. bilateral trade agreement later this year.
While open to Chinese suppliers in Apple’s ecosystem, Apple has prioritized Indian firms, supported by Taiwanese and Japanese suppliers. Tata Electronics, for instance, now produces iPhone enclosures locally for export, excluding iPads. Apple’s expanding Indian supplier base, including Motherson Group, Jabil, Aequs, Tata Electronics, Sunwoda, Foxlink, Salcomp, and Bharat Forge, reflects its shift away from China, boosting local value addition.
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