In a significant policy move, the Indian government is set to allow Chinese companies to apply for the Electronics Component Production Linked Incentive (PLI) scheme through the joint venture (JV) route, according to CNBC-TV18 reports.
Under the new framework, Chinese companies will be permitted to invest in India by forming joint ventures with Indian companies. However, strict guidelines have been set to regulate ownership and control.
As per the proposed norms:
-
Chinese companies investing through the JV route will be allowed to hold a maximum of 49% equity stake for specific electronic components. For other components, even tighter restrictions will apply, with caps of 26% or just 10%, depending on the category.
-
Importantly, management and control of these joint ventures must remain with the Indian entities.
-
JVs seeking PLI benefits will also need to include transfer-of-technology clauses to ensure technology flows from the Chinese entity to the Indian partner.
-
Furthermore, any Chinese JV will require approval under the Foreign Direct Investment (FDI) approval route as per Press Note 3 guidelines issued by the Department for Promotion of Industry and Internal Trade (DPIIT).
This decision is seen as a strategic balancing act — encouraging manufacturing investments while maintaining tight regulatory oversight over foreign entities, especially in sensitive sectors like electronics.
More details are expected as official guidelines are notified.
