Indian electronics component manufacturers are fast shifting away from China’s firms. As applications for the electronics component manufacturing scheme approach their deadline, domestic contract manufacturers including Epack Durable, Micromax's Bhagwati Products, Dixon Technologies, PG Electroplast, Amber Enterprises and Optiemus are finalising their proposals, but with a catch!
The firms are partnering with South Korean, Taiwanese and Japanese companies as equity stakeholders instead of Chinese firms, according to the CEOs of these Indian companies.
This shift is notable because China previously dominated as the primary market for products, parts and business collaborations. The change reflects India's stringent position on Chinese FDI, which requires approval from multiple ministries under Press Note 3 regulations, according to an ET report.
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The decision also reflects ongoing commercial tensions, exemplified by China's restrictions on rare earth magnet exports to India and other nations.
Electronics Manufacturing Scheme
"There is no denying that China is far ahead in large-scale component technology manufacturing, but we are careful about the government stand, as not just the initial investment will need government clearance, but even the subsequent ones. Such clearances will take a lot of time, impact our plans and incentive payout under the scheme," said a CEO of one of the largest players in the industry.
Shift From China To Taiwan, South Korea
In cases where technology is available from Taiwan and South Korea, it would be utilised, whilst Chinese dependency remains for other components. Negotiations are underway for technical partnerships or minor equity stakes, a source told the financial daily.
Dixon Technologies, the country's leading smartphone contract manufacturer, is currently finalising partnership terms with South Korean and Taiwanese enterprises, according to Managing Director Atul Lall. He indicated potential Chinese collaborations, pending finalisation of terms.
Jasbir Singh, CEO of Amber Enterprises, confirmed plans to submit a Rs 4,000 crore proposal under the component manufacturing scheme, with investments spread across the scheme's duration.
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Bold, but difficult mission! How India wants to counter China’s rare earth magnets monopoly - explainedSingh, representing India's premier air-conditioner contract manufacturer, detailed plans for two joint applications with Korea Circuit. These include a Rs 3,000 crore proposal for high density interface and semiconductor substrate production, alongside a Rs 1,000 crore initiative for printed circuit board manufacturing.
Rajesh Agarwal, director of Bhagwati Products, indicated the company's strategy to pursue equity joint ventures and technical partnerships with Korean, Taiwanese and Chinese organisations, subject to regulatory approvals.
The application deadline for the electronics component manufacturing scheme is set to conclude at July end. The initiative, allocated Rs 22,919 crore, spans across six years with an initial gestation period of one year.
The programme seeks to establish a robust component ecosystem by drawing substantial investments, enhancing domestic value addition from its current 20% average, and facilitating the integration of Indian firms into global value chains.
Official projections indicate anticipated investments of Rs 59,350 crore to generate products worth Rs 4,56,500 crore, creating 91,600 direct jobs and numerous indirect employment opportunities during its duration. The scheme has already garnered over 100 applications.
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‘Make in India’ success: Chinese smartphone brands bet on India for manufacturing & exports; Indian phonemakers compete for assemblyPG Electroplast's MD (operations), Vikas Gupta, confirmed plans to submit 4-5 applications, including partnerships with non-Chinese entities.
Optiemus's executive chairman Ashok Gupta indicated their preference for joint ventures with Taiwanese firms.
Epack Durable's managing director Ajay DD Singhania revealed plans for two applications totalling Rs 300 crore for sound components, printed circuit board assembly and display. He stated, "Our first priority is non-Chinese partners from Taiwan, South Korea and Japan."
A CEO highlighted the delicate situation for companies serving Chinese brands, noting that current component suppliers are predominantly Chinese, with some Taiwanese presence. "Some are Taiwanese too. So, we are talking to the clients too before finalising the applications," he said.
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