Electronic industry anticipates further partnerships with Chinese entities
Indian Electronics Sector Opens Up to Chinese Investments
The Indian electronics sector is witnessing a cautious but significant revival in Chinese investments, as the Indian government adopts a more flexible approach towards joint ventures (JVs) and investments from countries including China, South Korea, Taiwan, and Japan.
After a hard stance post-2020 due to border tensions and security concerns, India is now adopting a strategic approach that allows Chinese firms to hold up to 24-26% equity in Indian electronics companies, without triggering excessive scrutiny. Some proposals are even considering up to 49% under stricter conditions. This approach aims to balance national security with industrial growth.
One of the notable JVs that has received government approval is the partnership between Dixon Technologies and China’s Longcheer, which will manufacture a broad array of products including smartphones, tablets, smartwatches, AI PCs, automotive, and healthcare electronics. The partnership emphasizes Indian majority control alongside Chinese technology input.
The Indian government's key condition for permitting Chinese investments is significant technology transfer rather than low-value assembly work. The aim is to enhance domestic technological capabilities and local value addition, accelerating India’s ambitions to become a deeper manufacturing and design hub rather than just an assembly base.
The Electronics Component Manufacturing Scheme (ECMS), launched in April with a funding of Rs.22,919 crore, aims to make India self-sufficient in the electronics supply chain and attract large investments. The ECMS aims to produce Rs.4,56,500 crore and attract an investment of Rs.59,350 crore.
Several more Indian companies are expected to enter partnerships with Chinese companies, following Dixon and Micromax's Bhagwati, which has formed a joint venture with Huaqin Technology. The electronics and electrical sectors in India are tapping investments from China despite the government restrictions.
The new norms require approvals from different government departments for foreign direct investments from China. Investments under the ECMS from China are not met with higher scrutiny as earlier, requiring only approval from the Ministry of Electronics and Information Technology (MeitY).
This pragmatic recalibration reflects the recognition that China remains a dominant player globally—accounting for around 60% of electronics manufacturing capacity worldwide—and that India needs Chinese expertise and component supply chains to grow its electronics manufacturing ecosystem. However, this collaboration may create tensions with the USA, which remains wary of Chinese technology influence.
While India is signaling openness, this is a measured liberalization with safeguards. The government is keen to maintain technology sovereignty and national security through transparent, equitable partnerships and regulatory oversight. The collaboration window also dovetails with broader geopolitical rapprochement, exemplified by expected high-level visits and SCO Summit interactions.
In summary, Indian electronics sector investments by Chinese companies are resuming under a structured, cautious regime emphasizing Indian control, technology transfer, and industrial modernization, viewed as critical to meeting India's export goals and manufacturing ambitions while managing geopolitical risks.
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