Indian firms have resumed project work with Chinese partners despite pending approvals under Press Note 3.
Industry executives say approval delays have disrupted business plans and led to budget overruns.
Dixon Technologies has started work on new facilities even as PN3 approvals for Chinese partners remain pending.
Dixon Technologies Starts Projects Despite PN3 Approval Delays
Indian manufacturers have begun executing projects with Chinese partners while awaiting government clearance under Press Note 3, citing prolonged approval delays
Summary
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Multiple Indian firms that had planned to collaborate with Chinese companies have started work on projects while awaiting clearance from the Centre under Press Note 3, The Economic Times reported. The report, citing industry executives, said they expect approvals to gradually come through and have resumed initial work since delays in obtaining clearances were hampering business plans, including causing budget overruns.
Under Press Note 3 (PN3), companies need multi-departmental clearance for any equity investment from a neighbouring country. Chinese companies also require Beijing’s approval for equity or technical alliances with foreign partners to ensure that critical technology know-how and intellectual property remain with them, the report said. In November, the Prime Minister’s Office (PMO) reviewed PN3 and signalled the Centre’s willingness to recalibrate the framework, which has been in place since 2020.
As per the ET report, Dixon Technologies, the largest home-grown electronic contract manufacturer in India, has started construction of a factory for manufacturing display modules and ordered machinery despite China’s HKC Corp yet to receive PN3 approval.
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“PN3 for HKC will definitely come through,” ET reported, citing Atul Lall, managing director of Dixon Technologies. “That, God forbid, if it doesn’t come through, it does not have any impact on execution and starting the production at the plant. It will become a 100% subsidiary,” Lall added. The Dixon Technologies plant is planned to run as a 74:26 joint venture between Dixon and HKC.
According to the report, Dixon is also yet to receive PN3 approval for its joint venture with Chinese smartphone giant Vivo. Under the Vivo JV, the company expects to manufacture 20 million smartphones.
PN3 was notified in April 2020 during the COVID-19 pandemic, when global stock markets slumped and governments across the world were concerned about opportunistic acquisitions. The approval requirement significantly slowed the pace of inbound capital from China and affected sectors such as technology, fintech, and manufacturing, a report by CNBC said. Recently, the Centre was reported to have considered reducing multi-layer bureaucratic clearances for Chinese professionals owing to the rising need for technicians in these sectors.
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