Electronics Inc’s joint venture wait at China gate gets longer: Tech tie-ups face delays pending approval

India's electronics industry executives said they are frustrated by China's policy inconsistency, especially on technology transfer, stymieing collaborations and joint ventures.

“Nothing is getting resolved. As per the updates that we have from our (Chinese) partner, they are still waiting for the go-ahead from the Chinese government side on this,” contract manufacturer PG Electroplast Ltd MD, operations, Vikas Gupta, told analysts on November 17. “It is still pending.”

The company had expected to close the deal by April-May.


ET had reported that PG Electroplast is in talks with China's top AC compressor manufacturer Highly Group on a technical alliance for air-conditioner compressor manufacturing. PG Electroplast has not confirmed the partner’s name.

One of the largest Chinese television and appliance makers, Hisense Group has put on hold its plans to acquire up to 26% in a manufacturing plant being set up by homegrown contract manufacturer Epack Durable as such deals will require clearance by both the Chinese and Indian governments.

“Hisense wants to devote its time and investment in sales and marketing of its own brand, leaving manufacturing to third parties,” said a senior executive aware of the details. Apart from Epack, Hisense currently works with contract manufacturers Bhagwati Products and Dixon Technologies.

The Bharti Group’s bid to acquire a 49% stake in Chinese electronic firm Haier India hasn’t yet been signed despite all formalities being completed, missing two-three internal deadlines. Clearance by the Chinese government is pending. The last deadline was two weeks ago.

Highly, Hisense, Haier and the Bharti Group didn’t respond to queries.

Executives said the Chinese government wants to vet all big deals and technological partnerships with India to ensure that the intellectual property rights remain with China and no critical technical knowhow is shared.

To be sure, any Chinese foreign direct investment (FDI) also requires clearance by the Indian government as per Press Note 3 (PN3) norms. This mandates that any FDI from a neighbouring country has to be approved by the government. A person aware of the Haier-Bharti deal said not too many Chinese companies have entered into collaborations globally, be it technical or equity.

“So, the Chinese government wants to clear the deals which are pending. Rest all deal negotiations are completed,” he said. As per the deal, Bharti and Haier are likely to own 49% each in Haier India with the remaining 2% going to the local unit’s employees.

Epack’s MD Ajay Singhania told ET that its Hisense plant will be a dedicated unit and trial production for ACs has been completed. “Mass production will begin around December and then washing machine production,” he said. “Hisense also has plans to export to the Middle East and Africa from India. Chinese expats are managing the manufacturing here.”

Electronics companies, including large ones like Dixon, have emphasised the need for close collaboration with Chinese firms as India prepares for self-sufficiency in component production and increased local value addition. Some joint applications under the electronics component manufacturing scheme are pending with the government, executives said.

Beijing last month gave its approval to only four companies in India — Hitachi, Continental, Jay-Ushin and DE Diamonds — to import rare earth magnets. Applications by others are still pending.

China used to account for 80-85% of AC compressors used in India, but the Indian government has slashed these imports to around 45-50% with PLI schemes and import restrictions.