India might be becoming more receptive to the concept of permitting Chinese electronics firms to invest in India on a case-by-case basis, easing some of its concerns. Faced with pressure from
Indian companies
to soften its firm position, the ministry of electronics and IT (MeitY) recently reached out to Chinese air-conditioner compressor manufacturer
Shanghai Highly
(Group) Co to inquire about its intended investment strategies in the nation, according to individuals familiar with the situation.
This was planned as a joint venture with the
Tata Group
‘s
Voltas
holding the smaller stake. The Indian side canceled the plan last year because government approvals were not coming, according to an ET report by Writankar Mukherjee.
A senior industry executive mentioned that Shanghai Highly, which is one of the world’s largest AC compressor manufacturers, had replied to the ministry’s inquiries regarding the requirements to revive the plan. “They are yet to hear back,” the person said. Both MeitY and Shanghai Highly did not reply to the queries.
Shifting Stance On Chinese Investments?
Voltas, who applied for the production linked incentive (PLI) scheme for ACs, has been unsuccessfully attempting to establish a new partnership since last year due to the delay in the Shanghai Highly project. The joint venture was supposed to invest more than Rs 500 crore.
The Indian government has been closely monitoring investments made by Chinese companies in India due to border tensions. The regulations outlined in Press Note 3 of 2020 state that companies from countries sharing a land border with India, like China, require government approval before investing.
The outcome of the Shanghai Highly-Voltas project led to multiple Indian companies abandoning their intentions to collaborate with Chinese counterparts in establishing component ecosystems in India.
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It appears that the government’s position is changing, the financial daily reported. According to three senior executives at top contract manufacturers, there are indications from the bureaucracy that the government might consider allowing certain Chinese investments in India, evaluating each project individually.
They mentioned that a relaxation could be permitted in the high-tech electronic industry for compressors, display panels, and semiconductors, provided that the investment results in substantial value addition to domestic component manufacturing and if such technological expertise is not accessible in South Korea, Taiwan, or other locations.
The chief of a prominent contract manufacturing company said that the government has communicated the requirement for the Indian partner to hold a controlling majority stake in the joint venture.
Companies anticipate that any progress on this matter will only occur after the new government assumes office in June following the elections.
“Such feelers are coming, but we feel the final decision will surely be taken at a ministerial level,” another company boss said. “So, we would wait for the new government to form, take advice and then only forge any investment plans with a Chinese partner. There is no point jumping the gun right now.”
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The Indian electronics and mobile phone industry has been advocating for permission to accept
Chinese investment
, engage in joint ventures, and form partnerships. They have also been advocating for more flexible visa regulations for important Chinese professionals who are required during the construction of new plants.
