India Mulls 10% Cap on Chinese Equity in Electronics JVs

The Indian government is planning to restrict Chinese ownership in electronics joint ventures to a maximum of 10%, as per news reports. This move is part of a broader strategy to reduce supply chain dependency on China and strengthen India’s domestic electronics manufacturing ecosystem through technology transfers and local expertise development.

Building a Self-Reliant Electronics Manufacturing Base

Reports stated that the government aims to ensure that India’s electronics manufacturing sector does not become overly reliant on Chinese companies, as seen in other countries like Vietnam. In critical sectors such as drilling machinery, solar panel equipment, and electronics, India seeks to minimise Chinese influence and foster homegrown capabilities. The proposed 10% cap will be linked to mandatory technology transfer agreements to support the development of local expertise.

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Conditional Flexibility for Western Relocations

While maintaining a cautious stance, India is prepared to offer flexibility if American or European firms seek to relocate their operations from China to India. In such cases, Chinese suppliers working with these Western companies may be allowed to hold up to 49% equity in joint ventures. However, these instances will be treated as exceptions and assessed individually. Additionally, the government is actively encouraging Indian firms to expand their presence in the US market, ahead of a possible bilateral trade agreement later this year.

Conclusion

India’s proposed cap on Chinese equity in electronics joint ventures reflects its commitment to building a resilient and self-sufficient manufacturing base. By carefully regulating foreign participation, the country aims to safeguard critical sectors and support domestic growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.