India may relax Chinese FDI cap to 26% for select electronics JVs under new manufacturing scheme: Report
New Delhi: India is considering easing foreign direct investment (FDI) norms to permit Chinese companies to own up to 26% equity in joint ventures in specific, critical electronic components, while retaining a tighter 10% cap for most other segments, according to a Moneycontrol.com report.
The proposal was discussed during high-level meetings last week between government officials and domestic electronics manufacturers. As per the report, the Centre conveyed that Chinese investment proposals would not be given blanket clearance but evaluated individually on a case-by-case basis.
Lianchuang eyes Indian entry via partnerships
In a significant development, Lianchuang Electronics—a Chinese firm that supplies to Oppo, Vivo, and Samsung in India—is reportedly in talks with Amber Electronics and Optiemus Electronics to enter the domestic manufacturing space for displays, camera modules, and IC chipsets. The company’s Director and General Manager Zhan Xianan told Moneycontrol exclusively about its plans.
Lianchuang has also become the first Chinese company to formally express interest in India’s recently launched ₹22,919-crore Electronics Components Manufacturing Scheme (ECMS), the report said.
Indian firms mobilise as ECMS portal goes live
Following the release of the scheme’s guidelines and portal on April 26, Indian electronics manufacturers have begun preparations to apply under ECMS. Conversations are also underway between domestic players and electronics firms from China, Japan, South Korea, and Taiwan to explore strategic joint ventures.
“Last week, we met government officials for clarity on Chinese investments. While the government is open to it, the case-by-case nature of approvals has created some ambiguity,” said a senior industry executive, speaking on condition of anonymity. “We plan to engage with Chinese vendors who are already validated by global brands, as getting new suppliers certified could take years.”
Domestic, global interest surges in ECMS
Major Indian players including Dixon Technologies, Tata Electronics, Kaynes Technology, Micromax, Amber Enterprises, Optiemus Electronics, Syrma SGS, Munoth Industries, and the Murugappa Group have expressed strong interest in the scheme. International electronics giants such as Japan’s TDK Corporation, Taiwan’s Hon Hai Precision (Foxconn), Austria’s AT&S, Japan’s Murata Manufacturing Co, and China’s Lianchuang are also eyeing the opportunity to expand their footprint in India.
Quality control and design capacity in focus
Union IT and Communications Minister Ashwini Vaishnaw recently noted that all FDI proposals will be handled under the provisions of the FDI Policy Circular 2020. While he did not name any specific countries, he underlined that companies applying under ECMS must have functional design houses and meet Six Sigma quality standards.
Ashok Chandak, President of the India Electronics and Semiconductor Association and Semi India, highlighted the strategic importance of local design capability. “Without in-house design control, local firms can’t innovate or serve domestic needs effectively. Successful global companies are design-led, and India should aim for the same,” he said. At the same time, Chandak warned that achieving Six Sigma levels could be a significant hurdle for smaller firms in the sector.
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