In an attempt to boost the high-end electronics manufacturing sector in India, the central government is considering allowing Chinese companies to set up bases in the country with some riders, according to a report in The Economic Times.
Officials told the publication that the government may soon identify 50-60 Indian companies that would want to form a joint venture (JV) with their Chinese counterparts. They also said that the government is considering allowing foreign electronics manufacturers not just from China but also from South Korea, Taiwan, Vietnam and European countries.
However, the JV proposal may need to fulfil some conditions. One of them could be that the Indian company has a majority stake in the JV. Another requirement could be that the control of the board remains with the Indian firm, the report said.
These conditions are still being discussed within the government but are yet to be finalised. Still, the officials added, any proposal for such a JV could be considered if that leads to the growth of the electronics manufacturing ecosystem in the country.
In April 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) issued a press note saying investments in any sector from a country sharing a land border with India can only happen after getting government approval.
The decision, aimed at curbing "opportunistic takeovers or acquisitions" of domestic firms during the Covid-19 pandemic, likely impacted foreign investments from China.
Officials maintain that allowing all investment proposals from neighbouring countries may negatively impact the growth of local firms, which are trying to scale their operations to compete with global electronics manufacturing companies. "But proposals where high-end technology has to be sourced from the neighbouring country through a joint venture with a local firm can be approved to develop an ecosystem in India," an official told ET.
He added that specific proposals could be considered to allow the development of an ecosystem for electronics manufacturing in India.
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