Govt May Allow Chinese JVs in Electronics Sector, But With Conditions

Amid growing industry demand, the Narendra Modi government is reportedly considering allowing Chinese companies to invest in joint ventures with Indian electronics firms. However, such partnerships would come with strict conditions. Currently, all Foreign Direct Investment (FDI) from India’s neighboring countries, including China, requires prior government approval.

According to a recent Economic Times (ET) report, the government may permit investments in electronics joint ventures with Indian companies, but Chinese stakes would be capped at 10% and must involve technology transfer. Citing official sources, the report noted that the government would prefer partnerships with Chinese contract manufacturers and supply chain firms, rather than allowing Chinese consumer brands significant equity control.

Exceptions may be made where American or European companies are relocating operations from China to India. In such cases, Chinese suppliers could be allowed to hold up to a 49% stake, though each proposal would be evaluated on a case-by-case basis, ET reported.

Move to Boost Electronics Manufacturing

To strengthen electronics manufacturing amid limited domestic capabilities, several Indian companies are seeking joint ventures with Chinese players. Firms like Micromax, Dixon Technologies, Zetwerk, and Syrma SGS are actively pursuing such collaborations to enhance local production, reduce dependence on imports, and integrate into global supply chains. Micromax is reportedly partnering with Chinese suppliers for component sourcing, while Dixon Technologies has entered a joint venture with China’s HKC to manufacture display modules. Zetwerk is exploring acquisitions and technology transfers to expand its operations, while Syrma SGS remains open to partnerships, pending greater policy clarity.

Meanwhile, Chinese companies—facing increasing challenges in the U.S. market due to tariffs and trade tensions—are reportedly more willing to comply with India’s conditions to access the growing Indian market.

As part of its broader push, the Indian government has introduced a Production Linked Incentive (PLI) scheme for electronics components, with a budget of Rs 22,919 crore over six years. The scheme aims to attract investments up to Rs 59,350 crore, generate production worth Rs 4,56,500 crore, and create around 91,600 direct jobs. It targets key components such as display modules, camera modules, PCB assemblies, lithium cell enclosures, resistors, capacitors, and ferrites.

Govt Remains Cautious Over Chinese Investment

Despite some signs of cooperation, the government remains wary of China's shifting policies, according to the ET report. Key Chinese exports—such as drilling machinery, solar panel manufacturing equipment, and electronics—are reportedly being restricted by Beijing, raising concerns in New Delhi.

India is consciously working to avoid over-dependence on Chinese capital and capabilities, aiming to prevent a scenario like in Vietnam, where Chinese firms dominate the electronics manufacturing landscape.

Currently, no formal proposals have been submitted by U.S.-based manufacturers to relocate Chinese suppliers to India, with many companies still assessing their options amid ongoing geopolitical uncertainty. In the meantime, the Indian government is encouraging local firms to target the U.S. market more aggressively and expects to finalize a bilateral trade agreement with Washington later this year, the report added.