Chinese Firms Look for Partnerships in India
Chinese firms are looking towards India as a substitute market because of the high tariffs from the United States. In order to overcome these difficulties, they are looking at collaborations with Indian companies to produce and export goods from India. In this endeavor, Reliance Industries is said to be at the helm of negotiations to take a stake in Haier India, a unit of Chinese electronics major Haier. Likewise, Shanghai Haili Group has resumed talks with Tata Group's Oltas for a possible alliance.
Haier to Sell Major Stake in Indian Subsidiary
Haier, a household name for its refrigerator brands, is going to sell a majority stake in its Indian operation. Reliance Industries is in the lead to purchase this stake, according to an English news agency. Haier wants to offload 25% to 51% of its Indian arm to localise its manufacturing business. If Reliance takes over a 51% stake, it will gain control of the company. Bharti Group, however, with Sunil Mittal at its helm, is also vying for this.
India's Shifts since 2020
Following increased tensions between China and India in 2020, India made Chinese firms tighten the terms of their investment. Existing policies mandate Indian businesses to own a majority stake in any joint venture with Chinese businesses. According to this policy, Shanghai Haili has committed to seeking a minority stake in its venture with Tata's Oltas. Experts observe that India's huge domestic market and ability to circumvent US tariffs make it a desirable manufacturing hub. Further, the government's Production-Linked Incentive (PLI) program for electronics parts is likely to bring down the cost of manufacturing in India to Chinese levels.
Restrictions on Chinese Ownership
Official announcements show that Chinese control in electronics-related joint ventures can be limited to 10%. Such control is expected to carry terms like compulsory transfer of technology. It has been proposed by authorities that rather than encouraging Chinese brands, Indian contract manufacturers and suppliers will be favored. The government of India has indicated that the existing Foreign Direct Investment (FDI) regulations won't be eased for Chinese firms.
