NEW DELHI: India is expected to maintain a flexible approach toward Chinese investment in the electronics manufacturing sector, according to government sources. As per the official, India cannot afford to completely disengage from China as the country accounts for 60% of global electronics manufacturing capacity. He emphasized the necessity of collaboration with China for India's growth in the sector.
"We want to grow our manufacturing capacity. So, some sort of collaboration with China is something we can't avoid. Therefore, we have to be strategic about what we do, and how we do it. But it has to be done," said the official.
After years of limiting Chinese investments in India, the government is now gradually opening up its market to Chinese companies. Following the Galwan clash in 2020, India took a hard stance on China and its companies operating in the country. It banned over 200 Chinese apps, including popular platforms like TikTok, WeChat, and UC Browser, citing security and privacy concerns. Additionally, firms like Huawei and ZTE were excluded from participating in India’s 5G rollout.
Investments from Chinese companies have since required security clearance due to national security and data protection concerns. However, India has recently shown signs of easing these restrictions. Reports suggest that China has been unwilling to share technology, and that 300 Chinese employees were withdrawn from Foxconn, which could disrupt Apple iPhone production in India. In response, the Electronics Association has urged the government to implement swift policy measures, warning that continued unofficial restrictions could derail India’s $32 billion export-driven electronics manufacturing goals.
On Thursday, India began processing tourist visas for Chinese nationals for the first time in five years. While visa issuance had originally been suspended in 2020 due to the COVID-19 pandemic, restrictions continued because of tensions along the eastern Ladakh border.
Subsequently, NITI Aayog reportedly proposed allowing Chinese firms to acquire up to a 24 percent stake in Indian companies without requiring additional security clearances.
"The workers' issue doesn't affect all of the electronics industry, and those who have been affected have now been able to overcome it in their own way," the source said.
He added that the Ministry of External Affairs is aware of ongoing bilateral challenges and is working to resolve them. "The Foreign Minister has travelled to China and held meetings, tourist visas (for Chinese nationals) are opening up. It is a step-by-step process," he said.
Meanwhile, Dixon Technologies has received approval from the Indian government to form a joint venture (JV) with Chinese firm Longcheer. According to a stock exchange filing, the JV will be called Dixtel Infocomm, subject to the signing of definitive agreements between the two companies.
Dixon has been engaging with several Chinese firms for joint ventures. It has already signed separate agreements with Chongqing Yuhai Precision Manufacturing Co. Ltd and the Indian arm of Kunshan Q Technology for the manufacture and sale of electronic components used in devices like mobile phones and laptops.
“Dixon has received approval from MEITY to form a prospective joint venture in India with Longcheer, through an optimum structure to be mutually agreed between Dixon and Longcheer such that 74% of the total paid up share capital of the joint venture company is held by Dixon and 26% of the total paid up share capital of the joint venture company is held by Longcheer, subject to signing of definitive agreements,” said the company in an exchange filing.