Indian electronics manufacturers forge more and more partnerships with companies from South Korea, Taiwan, Japan

Kolkata: Indian electronics manufacturers are increasingly forging partnerships with companies from South Korea, Taiwan, and Japan, or pursuing projects independently, seeking to navigate unpredictable geopolitical ties between New Delhi and Beijing that’s prolonging regulatory approvals for corporate alliances in both countries.

The shift also aligns with Prime Minister Narendra Modi government's push over the past few years to diversify sourcing and technology partnerships beyond China as part of its strategy to build self-reliance in electronics manufacturing.

Over the past four to five months, companies such as Dixon Technologies, Amber Enterprises, PG Electroplast, Epack Durable, and Syrma SGS Technology have signed or operationalised at least eight such partnerships for producing electronic parts and finished products to cater to the domestic market and overseas.

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Dixon is set to operationalise a manufacturing joint venture with Taiwan's Inventec Corp for laptops, servers, desktops and related components. Earlier in June, it also signed a binding term sheet with Taiwan's Gemtek Technology to form a JV for manufacturing telecom products such as optical transceivers.

"Dixon's growth will happen through partnerships all over the globe,” said Atul Lall, managing director at Dixon, also a contract manufacturer for brands such as Samsung, Xiaomi, Motorola, Haier and Philips. “This will also help us to derisk and reduce complete dependence on China.”

Incidentally, Dixon's proposed JV with Chinese smartphone maker Vivo has been awaiting approval from the Indian government for more than a year.

A fortnight ago, Syrma SGS signed a pact with Japan's Kaga Electronics to set up a joint venture electronics manufacturing plant in India focused on serving Japanese customers. Epack Durable, meanwhile, plans to operationalise its proposed JV with South Korea's Bumjin Electronics to produce smart audio devices in the country.

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India's largest AC contract manufacturer, Amber Enterprises, last week broke ground on its printed circuit board manufacturing plant being set up with South Korea's Korea Circuit Co.

To be sure, the growing number of non-Chinese partnerships doesn’t diminish China's technological edge or cost competitiveness in electronics manufacturing, according to industry executives.

"It's not possible to get a non-Chinese partner in every segment or match their production costs," said Ajay DD Singhania, MD at Epack Durable. "For instance, in home appliances and mobile phones, Chinese companies remain the partner of choice. In areas such as semiconductors and certain components, non-Chinese partnerships are possible.”

Leading AC and television contract manufacturer PG Electroplast is building a more than Rs 300 crore AC compressor plant on its own after a proposed technical alliance with China's Highly Group remained stalled for more than six quarters due to pending approvals from the Chinese government. Machinery installation will commence in August for the facility slated to have an initial annual capacity of two million compressor units.

PG Electroplast MD (finance) Vishal Gupta recently told analysts that the company has acquired the capability to manufacture compressors, enabling it to offer cost-competitive and energy-efficient products to customers. The company didn’t identify the now-defunct Chinese partner’s name.