China will bow down before India as Modi govt set to use US’ tariff on China to dictate terms to Beijing on technology transfer, local manufacturing and …
New Delhi: Bharat Electronics may limit Chinese equity investments in joint ventures to up to 10 percent, which depend on technology transfer. India wants to promote local manufacturing. In this context, India is imposing conditions on China that will benefit it more. Currently, China is struggling with a tariff war with the United States, which makes it willing to accept India’s conditions.
Since the United States imposed tariffs of up to 245% on China, China has once again turned its attention towards India. Recently, it was reported that China has agreed to comply with all the conditions set by the Indian government to operate in India. Now, there is news about the next step. India is leaving no stone unturned to bend the Dragon. According to media reports citing sources, India may limit Chinese companies to a 10% equity investment in electronics joint ventures, provided that these Chinese companies agree to technology transfer with India. This condition has emerged at a time when Chinese companies want not only to expand their business in India under any conditions but also to diversify their operations. There is a reason for this as well. Due to the tariff war with the United States, Chinese products could become quite expensive.
According to information, only those electronics contract manufacturing partners or supply chain companies from neighbouring countries will be given priority in terms of equity ownership that emphasize local manufacturing. The government is continuously stressing on increasing manufacturing in the country. According to sources, if American or European firms wish to transfer units from China to India, the government is ready to amend the rules regarding Chinese equity. They stated that these firms’ Chinese suppliers could hold up to 49 percent stake, but this would be an exception. According to them, applications will be reviewed on a case-by-case basis. A person familiar with the discussions said that since Indian companies require technology transfer, the government may allow 10 percent Chinese equity in joint ventures. However, the door will not be opened for Chinese investment in electronics or other sectors.
The government is concerned about China’s changing stance as it is said that China is still obstructing the supply chain in three crucial areas, drilling machines, solar panel equipment, and electronics. Relations between India and China deteriorated after violence broke out along the border in 2020, leading the government to impose restrictions on Chinese investments. An industry official stated, “Drilling machines are made by German companies, but since they have supply chains in China, they are being stopped. The same situation applies to electronics supply chain components. Indian companies are facing difficulties in this regard.”
The government is eager to assist Indian companies in aggressively moving into the US market. These steps have been taken at a time when India and the USA are expected to sign a bilateral trade agreement by the end of this year. It is believed that the Indian government was prepared to adjust Chinese suppliers in Apple’s ecosystem. However, Apple has instead decided to build a base of Indian companies with the help of Taiwanese and Japanese suppliers.
According to experts, Tata Electronics has started making enclosures for the iPhone on its own.
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