To make the market roots deeper and increase competitiveness, multiple electronics manufacturers have requested the government to allow Chinese small-scale component makers to establish shops in India. This move comes after the request for clarification on the foreign direct investment (FDI) policy as it applies to countries which have a land border with India and its neighbours.
The India Cellular and Electronics Association, also known as ICEA also pursued the immediate payment of all inducements and remaining dues owed to the industry under various programs, which also include the production-linked incentive (PLI) scheme and other export advancement plans, on a June 23 letter to the Prime Minister Modi’s Office.
“A clarity on FDI Policy needs to be defined in view of the press note to facilitate shifting of companies which will help create the ecosystem, investments, create jobs, facilitate skill improvement, and help develop the overall sector,” ICEA Chairman Pankaj Mohindroo said in the letter. He also added that the lack of transparency on the policy for facilitating the shifting of global value chains (GVCs) with their ecosystems to India can damage the processes and mechanisms of companies looking to make the move.
India recently amended the foreign direct investment policy for countries sharing land borders on April 17, 2020, through the Press Note 3 to only authorise influxes through the administration route with the necessary clearances. The amendment took place amid the intensified Sino-Indian tensions and sought at dissuading investments from organisations based in China.
“Given the massive dependency on China for finished products, especially IT hardware, it is impossible to create a relocation pathway to deepen GVCs in India, without tier 2 and 3 manufacturers for finished products, sub-assemblies and components from China,” ICEA said.
Recently, Chinese firms in India have been under the scanner of the government and ED, namely Xiaomi and Vivo.
