Electronics Inc asks govt to OK China JVs with 26% stake cap
Leaders in the Indian electronics sector are calling on the government to allow joint ventures with Chinese companies through an automatic approval mechanism, limited to a 26% minority ownership. They emphasize that this strategy is crucial for th...
Business groups say fixed norms key to develop advanced component capacity in India
Electronics industry leaders have asked the Centre to allow investment proposals featuring joint ventures with Chinese companies in the automatic route, while limiting equity ownership to a minority 26%, sources said.
Recommendations from multiple industry bodies including the Confederation of Indian Industry (CII), and the India Electronics & Semiconductor Association, has pointed out this is crucial to establish advanced component manufacturing in India, according to documents ET reviewed. The industry told the government that having a fixed guideline for Chinese investments, as opposed to the current practice of a case-by-case evaluation, will also unleash the foreign direct investment flows in electronics.
Meanwhile, ministry of electronics and information technology (MeitY) officials indicated the government has received multiple applications from foreign players for the Electronic Component Manufacturing Scheme (ECMS). "We have communicated to other ministries that there was a lot of interest in the Indian electronics market, and foreign manufacturers are keen to come in. But security and strategic concerns remain. This is a matter that must be discussed on an inter-ministerial level," a MeitY official said.
Current Department for Promotion of Industry and Internal Trade (DPIIT) guidelines mandate foreign direct investment from neighbouring countries from 2020 need prior security clearance from both the ministries of home affairs and external affairs.
Chinese entities do not feature in any of the 24 investment proposals from 21 separate companies approved so far under ECMS. MeitY is in the process of approving ECMS applications in lots, while other proposals are set to be announced soon, officials said.
ADVERTISEMENT
Representations from industry bodies on the matter have increased after electronics major Dixon Technologies received approval from the MeitY to form a joint venture with Chinese peer Longcheer Intelligence Private Limited, an industry executive said.
Dixon will have 74 percent stake in the new JV, Dixtel Infocomm, while 26 per cent will be owned by Longcheer, known globally for research, development, design, and manufacturing of intelligent products such as smartphones, tablets, IoT devices, and smart hardware.
