India May Ease Restrictions on Chinese Electronics Investments
The Indian government is considering easing restrictions on investments from Chinese electronics firms, according to a report in The Economic Times. This potential shift comes amidst ongoing border tensions between the two countries.
The report cites sources indicating that the Ministry of Electronics and Information Technology has reached out to Shanghai Highly (Group) Co Ltd, a Chinese air-conditioner compressor manufacturer, to discuss potential investment plans in India. This follows the abandonment of a previously planned joint venture between Shanghai Highly and the Tata Group's Voltas due to the lack of government approvals.
The Indian government has been scrutinizing investments from Chinese companies since the introduction of Press Note 3 norms in 2020. These norms require companies from countries sharing a land border with India to obtain government clearance before investing.
However, the report suggests that the government may consider permitting certain Chinese investments in specific sectors, such as high-tech electronics, particularly for compressors, display panels, and semiconductors. This would be contingent upon the investment resulting in substantial value addition to domestic component manufacturing and the absence of comparable technological expertise in other countries.
The report also mentions that the government has communicated that in such scenarios, the Indian partner must hold a controlling majority stake in the joint venture.
The Indian electronics and mobile phone sector has been advocating for the authorization of Chinese investment, joint ventures, and collaborations. They have also been pushing for more lenient visa regulations for crucial Chinese professionals required during the construction of new facilities.