Tech Transfer or Nothing: India’s New China Policy

• Chinmay
• July 23, 2025
• Electronics, India, News
• Dixon JV China, electronics tech transfer, India China joint ventures, Indian electronics component policy, Make in India electronics, PLI scheme 2025, Press Note 3 investment, smartphone export policy, value addition in electronics India
• 0 Comments

India’s electronics manufacturing ambitions may soon hinge on a strategic middle ground: allowing Chinese investments through joint ventures (JVs) that bring not just capital, but also technology transfer. As the government aims to scale up local electronics production and deepen domestic value addition, officials from the Ministry of Electronics and IT (MeitY) have indicated support for Chinese collaboration—only if tied to know-how, not just assembly lines.

The New Rule: No Tech, No Entry

According to senior officials, MeitY is fundamentally supportive of JV models where Indian firms gain access to core manufacturing processes and component expertise. This move aligns with recent suggestions from Niti Aayog and industry associations, which argue that local players need Chinese technical knowledge to scale and compete globally.

“If it’s just assembly, it won’t be supported. The idea is to learn and grow, not stay dependent,” said one official.

Why This Matters: Value Addition and Component Scale

India’s local value addition in electronics has grown from single digits to over 20% in just 6–7 years, driven by schemes like PLI (Production Linked Incentives). The government now aims to hit:

• 30% value addition by 2026
• 38% within 5 years — matching China’s benchmark

To hit these targets, India needs to manufacture core components like PCBs, semiconductors, rare earth magnets, and advanced displays — areas where Chinese firms currently dominate.

Strategic JVs Already in Motion

Several Indian companies, including Dixon Technologies and Micromax (Bhagwati Group), have JV proposals pending approval under India’s tightened foreign direct investment rules (Press Note 3). These partnerships aim to build local capabilities in areas such as:

• Camera modules
• Lithium-ion battery cells
• LED displays
• Passive components

Press Note 3 and the China Factor

In 2020, following border clashes, India invoked Press Note 3 — requiring prior government approval for investments from countries sharing a land border, including China. While this slowed capital inflows, it also triggered a broader rethink of how to de-risk India’s supply chains without losing access to high-tech manufacturing expertise.

China’s Trade Curbs & The Industry’s Growing Alarm

India’s smartphone production has boomed—$64B in FY25 vs. $26B in FY19—and exports crossed $24B this year. But China has pushed back. Recent informal trade restrictions, export curbs on rare earth materials, and orders for Chinese firms to pull out of Indian JVs have raised alarm within the industry. An open letter from manufacturers warned that sourcing alternatives from Japan or Korea costs 3–4x more, threatening the sector’s competitiveness and $32B smartphone export target.

The Bottom Line

The message is clear: India needs to build, not just assemble. But that can’t happen in isolation. Technology-sharing joint ventures may offer the best path forward — balancing national security, economic resilience, and industrial scale.

As India prepares to roll out a new ₹22,919 crore electronics component manufacturing scheme, expect JVs with meaningful tech transfer to get a green light — and shape the next chapter of Make in India.