Indian firms race to forge China ties ahead of Rs 25,000 crore electronics component incentive scheme rollout

Indian electronics manufacturing services (EMS) firms are accelerating talks with global supply chain players—primarily Chinese companies—to establish joint ventures and strategic partnerships in the electronics component sector. This push comes as the government finalizes a Rs 25,000 crore incentive scheme to bolster domestic manufacturing, which is set for Cabinet approval soon.

Major players such as Dixon, Micromax, Zetwerk, and Syrma SGS are actively exploring collaborations with Chinese component suppliers and are optimistic about swift approvals under Press Note 3, executives told Moneycontrol in separate interactions.

The IT Ministry has finalised the contours of an ambitious incentive policy for electronic components manufacturing. The outlay is around Rs 25,000 crore, lower than the Rs 40,000 crore the electronics industry demanded. Sources said the proposal is likely to be sent for cabinet approval this week.

The initiative targets key components like display modules, sub-assembly camera modules, printed circuit board assemblies, lithium cell enclosures, resistors, capacitors, and ferrites, aiming to attract investment and create jobs.

Sources said government consultations have signaled a willingness to allow joint ventures with Chinese firms that are part of the global supply chain and work with international brands. This has spurred Indian EMS companies to pursue high-level negotiations with Chinese players embedded in global value chains (GVCs).

Moneycontrol previously reported that the government is open to JVs between Indian and Chinese companies with appropriate checks and balances. The interministerial committee, chaired by the Home Ministry, will evaluate each proposal on a case-by-case basis.

READ MORE: India may allow JVs with Chinese firms

With the Indian government easing its stance on China-linked partnerships, EMS firms are moving quickly to secure key deals that could shape the country’s electronics manufacturing landscape in the coming decade.

Micromax, which recently partnered with Taiwan’s Phison Electronics to produce storage modules and also formed a joint venture with China's Huaqin through its group company, Bhagwati Electronics, has mapped out a decade-long plan to build India’s electronics component ecosystem and is in the final stages of key joint ventures.

“Micromax is closely working on the component supply chain strategy. While Phison's deal has secured memory components, we are also looking at similar joint ventures for other critical components under the upcoming scheme,” a source familiar with the company’s plans said.

Micromax aims to bypass lengthy qualification processes by working with component suppliers already serving major global and Chinese smartphone brands.

“If these suppliers are from China, we have no choice but to partner with them to remain competitive,” the source added.

Dixon Technologies has also formed a joint venture with China's HKC to produce display modules by July-September 2025. The company is also exploring similar partnerships for precision components, mechanicals, camera modules, and battery packs.

“We have hired a senior resource and are building a team to execute these projects. The component PLI rollout by the government will strengthen our backward integration and open a massive market for Dixon,” said Managing Director Atul Lall during the company’s Q3 earnings call.

Dixon is also in talks to establish a $3 billion display fabrication facility in India, contingent on government subsidies under ISM 2.0. “We are awaiting policy guidelines to proceed,” Lall added.

Notably, Dixon has already received the government nod for its stake purchase in Ismartu India, a subsidiary of China's Transsion. It is currently awaiting a nod for its joint venture with Chinese handset maker Vivo to make the latter's smartphones available in India.

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Zetwerk, a $2 billion manufacturing firm, is also eyeing joint ventures and technology transfers with global component manufacturers, including Chinese players and exploring acquisitions to expand its electronics components business.

“We are looking at partnerships to grow inorganically and seeking global players interested in working with an established ecosystem player like us,” said Josh Foulger, President of Zetwerk Electronics.

Syrma SGS Technology, a Mumbai-based EMS firm that recently won a contract from MSI to manufacture its laptops in India, is open to partnerships with global component players and is awaiting the policy's announcement.

“Yes, we are open. Once the policy is announced, we will evaluate it seriously. Any partnership will require a strong technology partner, and the project must justify itself with export potential,” Managing Director Jasbir Singh Gujral told Moneycontrol. Gujral emphasised that upcoming projects must align with global demand and integrate into international supply chains.