Team Siliconindia

• India allows Chinese electronics firms to invest via joint ventures only, ensuring technology transfer and Indian management control.
• New policy may permit up to 24% Chinese equity in Indian firms, with strategic caps and strict FDI safeguards.
• Major Indian EMS players like Dixon and Micromax accelerate collaborations as Rs 25,000 crore PLI scheme nears rollout.

India is signaling a strategic pivot in its electronics policy by opening the door to collaborations between Indian firms and Chinese manufacturers but only under strict conditions that prioritize technology transfer and domestic control. Recent statements from the Ministry of Electronics and IT (MeitY) indicate that Chinese investment will be permitted only through joint ventures with meaningful transfer of know-how, explicitly disallowing standalone assembly operations with no benefit to Indian partners.

Government and industry sources indicate Niti Aayog has floated the idea of relaxing the regulations for Chinese players to acquire up to 24 percent minority stakes in Indian firms without subjecting them to further clearance. This is part of larger deliberations to balance India's self-reliance drive with the realities of global supply chain interdependencies.

To facilitate this move, the government is concluding a Rs 25,000 crore production-linked incentive (PLI) scheme aimed at increasing domestic production of electronics components like display panels, camera modules, PCBs, resistors, capacitors, and lithium cell enclosures. In preparation for the new regulations, large domestic electronics manufacturing services (EMS) players like Dixon Technologies, Micromax, Zetwerk, and Syrma SGS are accelerating joint ventures and tech partnerships with Chinese supply chain companies.

Also Read: SMFG-SBI Bet Big on Japan's Digital Affluent Boom with New Joint Venture

Out of these, Dixon Technologies is putting in Rs 1,000 crore to boost domestic production of key components like camera modules and mechanical enclosures through tie-ups with two Chinese partners gearing up for a large scale-up in line with the post-PLI scenario. Micromax has already signed a joint venture with China's Huaqin and is in talks with others for storage modules and memory components.

Policy drafts also hint at a potential limit on Chinese equity in joint ventures: generally capped at 10 percent, although higher up to 26 percent in select strategic component industries. No matter the stake size, all joint efforts have to provide technology transfer, ensure Indian partner management control, and meet tough Foreign Direct Investment safeguards.

This change is an acknowledgment of a pragmatic realignment: India recognizes that although its ambition is greater domestic value addition in electronics, complete decoupling from China is neither possible nor useful in the face of existing dependencies. By designing partnerships to direct experience, enhance quality, and reinforce the local supply base, India is seeking to create a self-sustaining sector while balancing security and economic threats.