As a cautious step to bolster India’s domestic value addition in electronics, the government has lifted restrictions on some capital funding proposals from Chinese and China-attached companies.
An inter-ministerial committee in India has sanctioned five to six investment proposals in the electronics manufacturing sector, including some from Chinese companies and others with Chinese affiliations, according to a report by the Economic Times.
The panel has conducted two rounds of meetings and approved seven to eight proposals across various sectors, most of which are in electronics.
Among the approvals is Luxshare, a major Chinese electronics supplier for Apple. Additionally, a joint venture between Bhagwati Products (Micromax) and Huaqin Technology has been approved, with the Chinese firm holding a minority stake. Other approved proposals involve Taiwan-based companies listed in Hong Kong or with investments originating there.
These approvals come amid increased scrutiny of Chinese investments in India due to heightened border tensions and represent some of the first involving Chinese entities in recent times. They also coincide with India’s electronics manufacturing sector intensifying its push for investment linked to China to enhance and expand the country’s supply chains.
Indian businesses are advocating for a reassessment of trade relations with China. In 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) revised the foreign direct investment (FDI) policy to require prior government approval for investments from countries sharing a land border with India. This change followed border clashes between India and China in mid-2020.
However, the government seems to be cautiously reopening to Chinese investments with protective measures in place. This change is motivated by the belief that boosting local value addition is essential for India to attain self-sufficiency in electronics manufacturing.
