India May Allow Chinese Investment in Electronics With Conditions
India is considering easing its restrictions on Chinese investment in the electronics sector, but only under strict conditions, according to a report first published by The Economic Times. The government may support Chinese investment proposals if they involve joint ventures with Indian companies and include clear technology transfer. Officials from the Ministry of Electronics and Information Technology (MeitY) stressed that the focus will be on boosting domestic capabilities rather than just setting up assembly lines.
The report highlights that proposals lacking knowledge-sharing components are unlikely to get approval. “The priority is to ensure Indian companies learn and absorb technology,” a senior official said. Many electronic components are currently sourced from Chinese suppliers, making their involvement critical for the success of India’s ₹22,919 crore component incentive scheme.
This strategy aligns with suggestions from NITI Aayog and industry leaders, who have proposed allowing up to 24% Chinese ownership in electronics joint ventures without triggering stricter FDI rules under Press Note 3. The move also supports India’s larger aim of increasing local value addition in electronics, which currently stands at over 20%, and is targeted to reach 30% in the next few years.
Despite ongoing geopolitical tensions and past restrictions following the 2020 border clashes with China, officials say MeitY has backed technology-based collaborations that are in the national interest. Informal trade barriers and rare earth supply challenges from China have recently impacted Indian manufacturing, especially in smartphones.
Indian electronics firms like Dixon Technologies and Bhagwati (Micromax) are currently awaiting government approval for joint ventures with Chinese companies, which are expected to play a key role in building India’s electronics ecosystem.
The government’s cautious approach aims to ensure strategic technology gains while maintaining security and economic independence.
Source: Moneycontrol
