Vivo-Dixon deal approval reveals India's new China playbook

The government's approval for Vivo Mobile India and Dixon Technologies to set up a joint venture has significance far beyond smartphone manufacturing. On the surface, it clears a long-pending proposal involving one of India's largest electronics manufacturers and one of the country's biggest smartphone brands. But the decision also offers the clearest indication yet of how India's approach to Chinese-linked investments is evolving.

For years, discussions around Press Note 3 have largely been about restrictions and scrutiny of Chinese investment. Yet a series of approvals over the last two years suggests that India is no longer viewing Chinese participation in manufacturing through a binary framework of acceptance or rejection. Instead, policymakers appear to be shaping a model that allows access to Chinese technology, scale and industrial expertise while ensuring that ownership, governance and long-term value creation increasingly reside within India.

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The Vivo-Dixon deal approval shows that a template might emerge for future Chinese participation in Indian manufacturing.

From restriction to selective engagement

When India introduced Press Note 3 in 2020 following the Galwan clash with China and deteriorating bilateral ties, all investments from countries sharing a land border with India were brought under government approval requirements. The move was widely interpreted as an effort to curb Chinese investment and prevent opportunistic acquisitions of Indian assets. The policy undoubtedly slowed the flow of fresh Chinese capital into India. Numerous proposals remained stuck for years, and several companies found it difficult to expand operations or undertake new investments. At the time, many observers viewed the framework as a near-complete shutdown of Chinese investment channels.

What has emerged since then is a more nuanced reality. Rather than permanently excluding Chinese companies from strategic sectors, the government appears to be distinguishing between investments that increase Chinese control over assets in India and those that help strengthen India's domestic manufacturing ecosystem under Indian leadership.

The emergence of the Indian-majority model

The Vivo-Dixon joint venture fits neatly into a pattern that has become increasingly apparent since 2023. Under the approved structure, Dixon Technologies will hold 51% of the joint venture, while Vivo Mobile India will own 49%. The entity will manufacture smartphones and other electronic devices, primarily for Vivo but potentially for other brands as well.

The structure resembles another landmark transaction that took place outside electronics. In 2023, JSW Group partnered with MG Motor India, resulting in JSW holding a majority stake while China's SAIC Motor became a minority shareholder. That deal was widely seen as a breakthrough because it provided a pathway for a Chinese-linked business to continue expanding in India while addressing concerns around ownership and control.

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Since then, similar arrangements have begun appearing in electronics manufacturing. Dixon received approval for a joint venture with Chinese display maker HKC Overseas to manufacture display modules in India. Dixon also secured approval for its partnership with Longcheer Intelligence, one of China's largest original design manufacturers (ODMs). In that venture, Dixon holds a commanding 74% stake, while Longcheer owns 26%.

These deals suggest that policymakers are increasingly comfortable with Chinese participation when Indian companies remain firmly in control.

Why Longcheer matters

Among the recent approvals, the Dixon-Longcheer partnership may be strategically very important. Longcheer is not simply a manufacturing company. It is one of the world's leading ODMs involved in designing smartphones, tablets, wearables and other electronic devices for global brands. Unlike a contract manufacturer that merely assembles products, an ODM contributes engineering capabilities, product architecture, reference designs and supply chain expertise. This matters because India's electronics ambitions have gradually moved beyond assembly.

Over the past decade, the country has become one of the world's largest smartphone manufacturing hubs. The next challenge is moving higher up the value chain into design, engineering and component manufacturing. Partnerships such as the one with Longcheer could potentially help Indian companies acquire capabilities that took East Asian firms decades to build. The government appears willing to facilitate such technology partnerships as long as they are embedded within Indian-controlled structures.

A shift from Chinese capital to Chinese know-how

One of the most important developments, often overlooked in discussions around Press Note 3, is that the focus increasingly seems to be shifting from capital to capability. The government does not appear particularly interested in creating pathways for unrestricted Chinese ownership in strategic sectors. At the same time, it recognises that Chinese companies possess expertise across electronics manufacturing, supply chains, product design and component ecosystems that India currently seeks to develop. The emerging policy response appears to be an attempt to separate know-how from control.

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Under this framework, Chinese firms can contribute technology, designs, manufacturing processes and customer relationships, while Indian companies provide the operating platform, local management, the regulatory interface and majority ownership.

The objective is not to replicate China's manufacturing ecosystem overnight but to absorb parts of that ecosystem into India while ensuring that the resulting industrial capacity is ultimately anchored in Indian firms.

The real battleground is components

The focus on smartphone assembly often obscures where the next phase of competition lies. India already manufactures hundreds of millions of mobile phones annually. The larger challenge is increasing domestic value addition by localising components that continue to be imported in large quantities. Displays, camera modules, batteries, connectors, mechanical parts and various electronic sub-assemblies account for a significant share of the value of modern devices. This is where partnerships with companies from China, Taiwan, South Korea and Japan become particularly important.

The Dixon-HKC venture addresses display manufacturing. Longcheer brings product design and access to the component ecosystem. Other Indian manufacturers are increasingly forging alliances with East Asian companies to strengthen capabilities in areas where India still lacks scale. As a result, the conversation is gradually moving from how many smartphones India assembles to how much of the electronics value chain can be created within the country.

Indian companies shine

Another important feature of recent developments is the growing prominence of Indian electronics manufacturers themselves. A decade ago, much of India's electronics manufacturing ecosystem revolved around multinational brands. Today, companies such as Dixon Technologies, Kaynes Technology, Syrma SGS Technology, PG Electroplast and Amber Enterprises are increasingly emerging as industrial platforms in their own right.

Dixon's recent partnerships illustrate this shift clearly. The Vivo venture brings manufacturing volumes. The Longcheer partnership adds design capabilities. The HKC arrangement strengthens the display ecosystem. These initiatives are helping transform Dixon from a contract manufacturer into a more integrated electronics platform.

This evolution mirrors the path followed by several East Asian manufacturing champions, which gradually expanded from assembly into design, sourcing and technology integration.

The China+1 reality

The broader geopolitical backdrop remains important. India continues to pursue supply chain diversification and seeks to reduce excessive dependence on any single country. At the same time, global electronics supply chains remain deeply intertwined with China. This creates a practical challenge. India wants to accelerate manufacturing growth, but many of the technologies, supplier relationships and industrial capabilities it needs are concentrated in Chinese and broader East Asian ecosystems. The answer emerging from recent approvals is neither complete disengagement nor unrestricted integration.

Instead, India appears to be constructing a framework in which Chinese firms can participate under conditions that strengthen domestic manufacturing, deepen localisation and maintain Indian control over strategic assets.

The Vivo-Dixon approval can be seen as part of a larger policy evolution. India's approach is increasingly moving beyond the initial phase of defensive restrictions that followed the deterioration in bilateral relations. What is emerging instead is a model of selective engagement, where Chinese participation is judged less by nationality alone and more by structure, governance and economic outcomes.

If ownership remains tilted towards Indian partners, production takes place locally, jobs and exports are generated, and strategic concerns are addressed, approvals appear increasingly possible.

That does not mean every proposal will be cleared. Nor does it imply that political and security considerations have disappeared. What it suggests is that India has begun to identify a framework through which it can access Chinese manufacturing expertise without surrendering control of the industrial ecosystem it is trying to build.