Chinese electronics firms' fundraising plans hit regulatory walls in India: Report

Most Chinese electronics brands in India are running on funds routed through their group entities as the absence of Press Note 3 clearance (PN3), required for equity funding, and ongoing regulatory actions have made receiving loans from local banks a challenge, a report by The Economic Times said on December 2.

As of now, the funding for top Chinese brands such as Oppo, Vivo, Lenovo-Motorola, Haier and Midea is taking place through the external commercial borrowing route, the report said.

Before the PN3 norms were implemented, these companies backed their Indian units through equity capital. The PN3 regulations came into effect in 2020 when foreign direct investments via the automatic route for firms headquartered in neighbouring countries, including China, were banned.

Investments from these specified countries need Centre’s prior approval. According to the report, Haier India’s PN3 application for an investment of Rs 1,000 crore has been pending before the government. Several firms received funds from their parent entities to meet their working capital requirements, company filings showed.