Dixon plans to partner China's HKC to make display modules

Dixon Technologies, India’s largest electronics contract manufacturer, is planning to take a 74% stake in a joint venture (JV) with China-based display firm HKC, which will take the balance, to manufacture display modules for smartphones, laptops and tablets with an initial investment of Rs 250 crore.

People with knowledge of the development said Dixon Technologies has applied to the government for security and investment approval and once it gets the go-ahead, the manufacturing unit will be set up in the country within eight to 10 months.

“As per the terms, the JV plans to invest Rs 250 crore in phase 1 of the project while more investments will be made as the capacity increases,” said one of the people, who did not wish to be identified.




A query sent to Dixon Technologies remained unanswered till press time.

If approved, it will be the company’s second partnership with a Chinese company in quick succession. A few months ago, the company had acquired a majority stake in China’s Transsion Holdings. While the Chinese phone maker was operational in India, making phones for brands such as Itel, Infinix and Tecno, HKC will be entering India through the new JV.

The development comes at a time when the government has started to give approvals to Chinese investments in India if they meet certain conditions. Recently, an inter-ministerial panel approved five-six investment proposals in the electronics sector which have some degree of Chinese investment. Prominent names that have recently got approval include Chinese electronics firm Luxshare, and a JV between Bhagwati Products (Micromax) and Huaqin Technology.



The approvals are only being given if the Chinese partner has a minority stake, while it must be clarified that investment and technology are critical to develop the local manufacturing supply chain in areas such as high-tech components. Besides, no Chinese nationals should be occupying key executive roles in any JV or foreign company operating in India.

The electronics industry has been seeking some relaxations in the foreign direct investment policy with China that was put in place in 2020 due to increasing tensions at the border. In submissions to various ministries, the electronics manufacturing industry had said that India had lost out on export opportunities worth $10 billion as well as $2 billion in value addition.

With the government planning to come out with incentives for components manufacturing, the need for Chinese expertise is set to increase, particularly for Indian companies such as Dixon Technologies, Lava and Bhagwati Products, according to experts.

Dixon Technologies makes the whole bouquet of devices including phones, TVs and washing machines. In smartphones, the company has a capacity of 45 million devices and another 10-12 million will be added after completion of the Transsion Holdings acquisition. This capacity would potentially cater to 55-60% of that required to cater to the Indian market.

Dixon Technologies makes smartphones for companies such as Motorola, Samsung and Xiaomi, and laptops for Lenovo and Acer.

The company also has a capacity to make 40 million feature phones, which is 65-70% of the capacity required for feature phones in the country. The company is a beneficiary of the smartphone as well as IT hardware production-linked incentive scheme.