Aiming high. Chinese electronics component makers look to form JVs with Indian players

Chinese electronics component makers are looking to partner with Indian companies, seeking to get a share of the burgeoning local manufacturing opportunities.

According to sources, some Chinese players are willing to set up joint ventures and give controlling stake to Indian firms as a significant chunk of electronics manufacturing is shifting from their home market to India. 

“A number of Chinese component makers do not want to miss out on the opportunity in India where electronics manufacturing is becoming huge. However, the geopolitical standoff between India and China prevents Chinese companies from bringing foreign direct investments. Therefore, these companies are in talks with Indian players to form joint ventures where the Indian party is in control.” said an executive of a Chinese electronics brand operating in India. 

A number of global smartphone and electronics brands have announced plans to shift part of their manufacturing from China to India over the past year due to the global geopolitical situation. Apple, for instance, is expected to shift 18-20 per cent of its iPhone manufacturing to India. Even Chinese brands such as Xiaomi are making products in India. 

“The recent supply chain disruption caused by the pandemic has made everyone realise that they need to spread their manufacturing base beyond China. India is emerging as the best viable alternative destination. Secondly, the ongoing global geopolitical issues between the US and China is also making top brands review their manufacturing strategy. As a result, manufacturers such as Foxconn have already set up their assembly units in India, and component makers will have to follow suit,” said an industry executive. 

Nearly 80 per cent of the components that go into making smartphones and other electronic devices are still imported, largely from China. Concerned about the rising import bill, the government has offered incentives to manufacture in India through schemes like Production Linked Incentive. However, Chinese players do not qualify to get these incentives.

The domestic electronics industry, as of FY20, is valued at $118 billion. India aims to reach $300 billion worth of electronics manufacturing and $120 billion in exports by FY26.

“Chinese component makers are at risk of losing business as global brands shift out of China. One of the ways to shore up revenues is to ride India’s manufacturing growth trajectory over the next 10 years.  Local partnerships with Indian players are key to them if they want to participate in this growth,” said an industry expert. 

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