India Warms Up To Chinese Investment In Electronics: What’s Behind The Shift?

India is signalling greater openness to Chinese investment in electronics manufacturing as bilateral relations show signs of improvement, according to government sources.

Electronics Growth Drives Diplomatic Shift

The shift comes as India seeks to expand its manufacturing capacity in the electronics sector, where China currently dominates with 60% of global production capacity.

“Sixty per cent of manufacturing capacity is in China and we want to grow our manufacturing capacity. So some collaboration or some kind of work with China is something we can’t avoid,” said the government source.

“Things are easing between India and China. There are signals,” the above-mentioned source said, pointing to the re-opening of tourist visas and External Affairs Minister S Jaishankar’s recent visit to China as evidence of warming ties.

Dixon Technologies has been actively pursuing partnerships with multiple Chinese firms. A joint venture with Chinese smartphone maker Vivo is also under development, sources confirmed.

Govt Seeks Solutions to Industry Concerns

Government sources acknowledged ongoing discussions with the Ministry of External Affairs and relevant ministries to resolve industry concerns about Chinese partnerships.

“We are raising issues of industry with MEA and respective ministries, hopeful to find a solution,” the source said.

The government appears to be taking a pragmatic approach to two recent challenges involving Chinese operations in India. Regarding the recall of Chinese workers from Foxconn facilities, sources downplayed the impact on the broader electronics industry.

“I think to a large extent, the worker thing doesn’t affect all of electronics industry,” the source explained, noting that Foxconn employs workers from Taiwan, America and Vietnam in addition to China.

Supply Chain Solutions Under Evaluation

On restrictions related to rare earth magnets, government sources expressed confidence that the industry would adapt. Several workarounds are being explored, including importing finished components rather than raw materials, and seeking alternative suppliers or technologies.

“There are a number of ways in which you can overcome this,” the source said. “The restriction is on importing that material. You make the component, you can import the component as it is. In other cases, you look at alternatives.” 

(Inputs from ANI)

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