Under the Electronics Component Manufacturing Scheme, the Indian government is now allowing Chinese businesses to take advantage of Production-Linked Incentives (PLI).
This is a major change in policy because, in the past, Chinese companies were mostly prohibited from taking part in government-sponsored incentive schemes in delicate industries like electronics.
Chinese Companies Required To Establish JV With an Indian Partner To Be Eligible
As per reports, Chinese companies must first establish a joint venture (JV) with an Indian partner in order to be eligible.
The Indian partner must continue to hold the majority of the joint venture’s ownership and management.
In particular, Chinese companies are not permitted to own more than 49% of the joint venture.
To guarantee that decision-making power stays in Indian hands, the management control must be fully owned by the Indian company.
Technology transfer from the Chinese company to the Indian JV is required by a significant provision in the joint venture agreement.
This implies that as part of the partnership, Chinese companies must share their technological expertise with the Indian partner.
Prior to its establishment, the joint venture must also receive approval for foreign direct investment (FDI).
Electronics Component Manufacturing Scheme
Only two days have passed since Union IT Minister Ashwini Vaishnaw unveiled theElectronics Component Manufacturing Scheme’s official website and comprehensive guidelines.
On April 8, the program was formally introduced with a ₹22,919 crore budgetary allocation.
It is part of the government’s larger initiative to increase domestic electronics production and lessen reliance on imports.
Increased production of components like IT hardware, mobile parts, camera modules, display modules, and electro-mechanical devices is the goal of the Electronics Component Manufacturing Scheme (ECMS).
It is anticipated that both Indian and foreign businesses will contribute a total of ₹59,000 crore to the initiative.
The program’s goal is to increase the electronics manufacturing ecosystem in India and generate 91,000 new jobs.
The incentives provided differ based on the component type, capital expenditures, and turnover of the business.
The plan also aims to make India a more important global center for electronics manufacturing.
Indian businesses are becoming more interested in taking part in the program.
One of the leading producers of electronics in India, Dixon Technologies, has declared its intention to invest in the manufacturing of electronic components.
Additionally, the Tata Group has stated that it intends to invest ₹2,000 crore under the scheme specifically for the manufacturing of components.
By guaranteeing Indian control and requiring tech transfer, the policy may aid in striking a balance between international cooperation and domestic interests.
It shows how the Indian government is taking a calculated approach to benefit from technology while upholding legal protections.
