Tensions rise as Indian electronics firms face government roadblocks with Chinese joint ventures. With a July deadline looming, key partnerships and tech transfers hang in the balance.
Several Indian electronics firms are struggling to get government approvals for joint ventures (JVs) with Chinese companies, particularly those involving technology transfers, according to The Economic Times.
Seen as a setback, these delays threaten the upcoming July 31 deadline for applications under the Centre’s incentive scheme for electronics components manufacturing. The scrutiny on such collaborations has intensified amid rising geopolitical tensions.
China’s diplomatic support for Pakistan during recent conflicts, coupled with India’s Operation Sindoor following the Pahalgam terrorist attack, has heightened government caution.
Indian officials have imposed informal caps on Chinese stakes in JVs, limiting them to 10%, especially where technology sharing is involved. This restricts Chinese partners from having a meaningful role in daily operations.
As a result, many Indian companies are forced to revisit deals or seek partners outside China, although this proves difficult as key component suppliers, such as for displays and camera modules in budget smartphones, are primarily Chinese.
As per the report, executives from Indian electronics firms are urgently seeking clarity. At the beginning of this week, a top contract manufacturer’s executive met Chinese partners to reassure them that existing mobile phone manufacturing JVs would continue despite the delays.
Meanwhile, Apple’s efforts to expand manufacturing in India also face obstacles. The company’s plan to bring Chinese camera module supplier Sunny Optical into the country is reportedly delayed due to the current policy stance.
On the other hand, some companies like Dixon Technologies appear better positioned. Dixon’s joint venture with China’s HKC limits the Chinese stake to 26%, awaiting approval under Press Note 3—a regulation requiring government consent for investments from neighbouring countries.
However, industry experts warn that low Chinese stakes may hamper progress. They stress that active involvement from partners is crucial for keeping up with rapidly evolving product lines, suggesting that current restrictions could hinder India’s electronics ambitions.
