Local electronics parts vendors plan non-Chinese JVs

Economic Times

a day ago

Indian electronics companies are seeking partnerships. They are looking at South Korean, Taiwanese, and Japanese firms. This is for electronics component manufacturing. The reason is India's stance on Chinese investments. Companies like Dixon and Amber are finalising proposals. The electronics component manufacturing scheme deadline is approaching. The scheme aims to boost domestic value addition.
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Technical alliance
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Kolkata: As the deadline for submitting applications for the electronics component manufacturing scheme draws near, home-grown contract manufacturers such as Dixon Technologies Epack Durable , Micromax's Bhagwati Products and Optiemus are finalising most of their proposals with South Korean, Taiwanese and Japanese companies as equity partners, CEOs of these Indian firms said.This development is significant as China was the largest sourcing market for products and parts, as well as partnerships and JVs till now. Their decision stems from India's tough stand against Chinese FDI, which needs multi-ministerial nod under Press Note 3 norms.The move could also be attributed to continued business related conflicts such as the neighbouring country's rare earth magnet export curbs imposed on India, among other countries.The Press Note 3 norms were issued after the border clashes with China in 2020. Since then only a handful of large Chinese companies have received such clearances.'There is no denying that China is far ahead in large-scale component technology manufacturing, but we are careful about the government stand, as not just the initial investment will need government clearance, but even the subsequent ones. Such clearances will take a lot of time, impact our plans and incentive payout under the scheme,' said a CEO of one of the largest players in the industry.'So, wherever we have found the technology in Taiwan and South Korea, we would use that while for others we are still dependent on China. But we are trying to negotiate for a technical alliance or a minority shareholding with them,' he said, requesting anonymity.Amber Enterprises will put in Rs 4,000 crore application under component manufacturing scheme which will be invested through the tenure of the scheme, CEO Jasbir Singh said.As part of a joint venture with South Korea's Korea Circuit, a Rs 3,000 crore application for manufacturing of high density interface and semiconductor substrates and a Rs 1,000 crore application for printed circuit board manufacturing will be submitted, said Singh. Amber is the largest contract manufacturer for air-conditioners.The largest home-grown smartphone contract manufacturer Dixon Technologies' managing director Atul Lall said the company is currently finalising its applications and terms for joint ventures with South Korean and Taiwanese firms. 'There might be applications with Chinese too, but the terms are being finalised,' he said.Bhagwati Products is betting on Korean, Taiwanese and Chinese firms for equity joint ventures and technical collaboration depending upon the approval from competent authority, said its director Rajesh Agarwal.The window for applications under the electronics component manufacturing scheme closes by the end of July. The scheme has a budget outlay of ?22,919 crore and is spread over six years, with one year as gestation period.It is aimed at developing a robust component ecosystem by attracting large investments, increasing domestic value addition, which is at 20% on an average at present, and integrating Indian companies with global value chains.The government has said it expects to attract investment of Rs 59,350 crore to produce goods worth Rs 4,56,500 crore and generate additional direct employment of 91,600 people, besides many indirect jobs during its tenure. Already, over 100 applications have been received under the scheme.Vikas Gupta, MD (operations), PG Electroplast, said the company will submit 4-5 applications, including with non-Chinese partners.For Optiemus, Taiwanese companies are the first preference for joint ventures, said executive chairman Ashok Gupta.Epack Durable will submit two applications of Rs 300 crore in total for components for sound, printed circuit board assembly and display, said its managing director Ajay DD Singhania. 'Our first priority is non-Chinese partners from Taiwan, South Korea and Japan,' he said.A company CEO said that it was a sensitive issue for companies having Chinese brands as clients as the existing component manufacturers for those brands are all mostly Chinese. 'Some are Taiwanese too. So, we are talking to the clients too before finalising the applications,' he said.