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India May Allow Joint Ventures with Chinese Firms Under Revised Norms

Updated: Jun 12, 2024 05:13:28pm

India May Allow Joint Ventures with Chinese Firms Under Revised Norms

New Delhi, Jun 12 (KNN) The Indian government is considering allowing new joint ventures between domestic and Chinese companies, provided the Indian partner maintains a majority stake, according to multiple industry executives seeking such partnerships.

Senior officials from the Department for Promotion of Industry and Internal Trade (DPIIT) have been engaging with chief executives to facilitate these potential joint ventures, said the sources, who requested anonymity due to the sensitive nature of the discussions, reported ET.

Certain proposed manufacturing projects, particularly in the automotive and electronics components sectors, have been stalled for a couple of years.

However, companies are now revisiting negotiations with Chinese counterparts, buoyed by the government's evolving stance and the recently concluded joint venture between MG Motor India and JSW.

While the authorities are keen to support such collaborations, any joint venture involving a Chinese company will require approval under the norms outlined in Press Note 3, as the government seeks to scrutinise the Chinese entities thoroughly to safeguard national interests, the executives stated.

Significantly, the Indian partner must hold a majority stake in any such joint venture, ideally a dominant one, they added. This requirement stems from the reluctance of Chinese firms to share technology without clarity on their equity participation.

"Chinese companies are becoming reluctant to share technology even under a licensing agreement unless there is a roadmap for them to have an equity participation in the Indian venture," said the chief executive of a leading consumer electronics contract manufacturer.

Uno Minda, an Indian auto parts manufacturer that recently partnered with China's Suzhou Inovance Automotive Company, is working on structuring a potential joint venture in accordance with government instructions, according to industry sources.

Press Note 3, introduced in 2020 amid border tensions between India and China, mandates that companies based in countries sharing a land border with India can invest only after obtaining government clearance.

The government's evolving approach comes after India previously rejected certain proposed joint ventures due to regulatory hurdles, such as Voltas calling off a compressor manufacturing partnership with China's Highly International last year.

(KNN Bureau)


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