Some proposed manufacturing projects, especially for auto and electronics components, have been stuck for a couple of years now, but now these firms have restarted talks with Chinese companies buoyed by the government’s softened stance and the conclusion of the JV between MG Motor India and JSW.
While officials are keen to help such ventures, they have made it clear that any such JV needs to be approved under Press Note 3 norms since the government wants to scrutinise the Chinese companies thoroughly and not give blanket clearances to protect India’s interest, the CEOs said.
Also, the Indian partner needs to have a majority – ideally a dominant majority – in the JVs, they said.However, Chinese firms are reluctant to share technology without clarity on their equity participation.”Chinese companies are becoming reluctant to share technology even under a licensing agreement unless there is a roadmap for them to have an equity participation in the Indian venture,” chief executive of a leading consumer electronics contract manufacturer told ET.Homegrown auto parts manufacturer Uno Minda – which recently tied up with China’s Suzhou Inovance Automotive Company for technical licensing to manufacture parts of electric vehicles and is considering a JV with the Chinese firm – is working on a structure in accordance with government instructions, industry executives said.
Emails to DPIIT and Uno Minda remained unanswered till press time on Tuesday.
In the wake of border tensions between India and China, the government in 2020 brought in Press Note 3 norms, stipulating that a company based in a country that shares a land border with India (such as China) can invest in the country only after government clearance.
Last year, Tata-owned air-conditioner maker Voltas called off a compressor manufacturing JV with China’s Highly International since it did not receive regulatory approvals. Highly was supposed to own 60% in the JV.
ET was the first to report in May that India may be warming up to the idea of allowing Chinese electronics companies to invest in India on a case-by-case basis, relaxing some of its reservations.
Now that there is a continuity in the new government after the ruling alliance’s win in the recent elections, government officials have asked some Indian companies to apply for JVs under these lines, one of the executives cited above said.
