This policy adjustment is likely aimed at ensuring greater Indian control and participation in these strategic partnerships. The government's goal appears to be fostering a more balanced and equitable distribution of ownership and decision-making power within Chinese-Indian JVs.
The government is considering a policy shift that would only permit new Chinese-Indian joint ventures if the Indian entity holds a majority stake. This revised stance comes as several manufacturing initiatives, particularly in the auto and electronics components sectors, have faced delays in recent years.
However, the successful conclusion of the JV between MG Motor India and JSW has provided a positive precedent. Encouraged by this outcome, discussions between Indian firms and their Chinese counterparts have resumed, signaling a potential path forward for future collaborations.
The government is considering permitting new joint ventures (JVs) between Chinese and Indian companies under the condition that the Indian partner holds a majority stake. This development was revealed by four chief executives from the electronics and automobile industries who are interested in establishing JVs with Chinese firms, as reported to ET.
Some proposed manufacturing projects, particularly in the auto and electronics component sectors, have been stalled for several years. However, these companies have resumed negotiations with Chinese partners, encouraged by the government's more flexible approach and the successful JV between MG Motor India and JSW.
Officials are supportive of such collaborations but insist that any JV must comply with Press Note 3 regulations, which require thorough scrutiny of Chinese companies to safeguard India's interests. The CEOs emphasized that the Indian partner must hold a majority, ideally a dominant majority, in these ventures.
However, Chinese companies are hesitant to share their technology without clear terms regarding their equity participation. A chief executive of a leading consumer electronics contract manufacturer told ET, "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."
Uno Minda, a domestic auto parts manufacturer that recently entered a technical licensing agreement with China's Suzhou Inovance Automotive Company for electric vehicle components, is considering a JV with the Chinese firm and is working on a structure that aligns with government guidelines, according to industry executives.
Last year, Tata-owned air-conditioner maker Voltas canceled a compressor manufacturing JV with China's Highly International due to regulatory approval issues. Highly was intended to hold a 60% stake in the JV.
Economic Times first reported in May that India might be open to allowing Chinese electronics companies to invest on a case-by-case basis, easing some of its previous restrictions. Following the ruling alliance's victory in the recent elections, ensuring continuity in the government, officials have encouraged some Indian companies to apply for JVs under these new conditions, according to one of the previously mentioned executives.
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