NEW DELHI: In a move that could allow Chinese equipment manufacturers to operate in India, the Centre is considering permitting Chinese companies to invest under the Electronics Component Production Linked Incentive (PLI) scheme through joint ventures with Indian firms.
According to industry sources, the government is mulling allowing Chinese companies to own up to 26% in JVs for specific critical electronics components, while maintaining a 10% equity cap for most other categories.
In all cases, the management and control of the JV will remain with the Indian partner. Additionally, such JVs will need to secure approvals under the FDI norms.
The latest move comes after Chinese companies agreed to most of the terms and conditions, including the transfer of technology to India.
India-China relations touched their lowest point in April 2020 after the Galwan clashes. Subsequently, India mandated that FDI from entities or individuals based in countries sharing land borders with India would need prior government approval. The government allowed Chinese firms to operate in India only through partnerships with Indian firms.
The reason for allowing Chinese firms into India is China’s existing strength in component manufacturing infrastructure and scale. The government views Chinese investment as key to building a strong component ecosystem in India and raising value addition in smartphones and consumer electronics from the current 15–20% to 30–40%.
India has been also accelerating visa clearances of Chinese technicians involved in PLI scheme and electronic manufacturing projects.