11 hours ago
India, China companies explore technical tie-ups as as govt plans to ramp up electronics parts making capacity
Voltas' recent attempt to revive its joint venture talks with China's Highly Group for a compressor plant in India fell through, with the Chinese company instead offering a technical alliance. Highly cited prolonged Indian government approvals and ongoing geopolitical tensions as risks to an equity partnership. This marks a shift from two years ago, when Highly had rejected a similar tech-only tie-up with Voltas.
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When a team from Tata Group-owned air-conditioner maker Voltas visited China in late May to revive talks with Highly Group for a joint venture compressor plant in India , the Chinese major declined, and instead proposed a technical cited prolonged government approvals and geopolitical tensions as major risk factors to an equity partnership in tighter government scrutiny, several Indian firms are exploring Chinese partnerships under the upcoming ₹23,000-crore electronics component manufacturing scheme, and Chinese firms are now much more open to technical tie-ups and minority joint ventures than had rejected a similar technological collaboration proposal from Voltas two years ago.'The economic truth is we have to partner with the Chinese companies for the upcoming component scheme,' the chief executive of one of the largest electronics contract manufacturers in the country told ET on the condition of anonymity. 'While we don't need their capital as much as their technology, they, too, understand the changed geopolitical scenario, and are open to either holding a minority 20-30% equity in joint ventures or just a technical alliance.'Homegrown electronics contract manufacturers such as Dixon Technologies PG Electroplast , Epack Durable and Bhagwati Products are in talks with multiple Chinese companies to apply for the component scheme.A leading contract manufacturer said some Chinese firms have agreed to non-equity Group has already finalised a technical alliance with Noida-based contract manufacturer PG Electroplast to manufacture air-conditioner compressors, people cited above Chinese firm is open to more such deals where it will have an assured quantity of production in exchange for its technology, they and Voltas were forced to scrap a joint venture agreement in which the Chinese partner was to hold 60% two years ago. The proposal did not receive the government's Press Note 3 approval. At that time, Highly was not comfortable with just a tech tie-up.A Voltas spokesperson told ET the company undertakes regular visits to key supplier partners including Highly to strengthen technical collaboration and assess future opportunities.'While a range of strategic topics are periodically discussed as part of these engagements, there are no firm developments or commitments at this stage with respect to a joint venture or equity participation,' she Group and PG Electroplast did not Electroplast in a recent earnings call said it is setting up a compressor plant with a capacity of 5 million units per year near Pune for ₹350 has a joint venture proposal with HKC Corp for display modules currently awaiting Press Note 3 clearance. The Noida-based electronics manufacturing services firm will soon file another proposal for a JV with Vivo, the company management said in its latest earnings is also looking to attract over ₹59,000 crore of investments through the electronics component manufacturing scheme to promote domestic production and integrate Indian electronics companies into global value accounts for 70-75% of all electronics components imports into India. The rest comes mainly from Taiwan, Thailand, Vietnam, South Korea and Japan. Industry executives said components coming from Taiwan, Thailand and Vietnam are also mostly made by Chinese 2020, India turned cold to Beijing after military clashes, and issued Press Note 3 norms that require multi-department approvals for investments from businesses and entrepreneurs based in bordering countries such as Indo-Sino equations have further changed after India's 'Operation Sindoor' strike against Pakistan last month when Pakistan used Chinese artillery in the border clashes and claimed China was its 'all-weather strategic cooperative partner and ironclad friend'.
