Haier stake sale, PLI JVs in limbo as China-Pakistan Alliance worsens India ties

India has taken a cautious stance towards Chinese investments since the 2020 border clashes

Indian companies exploring partnerships with Chinese firms are bracing for tighter regulatory scrutiny, following China's recent show of support for Pakistan during the latest hostilities, an Economic Times report said on Wednesday.

This development has clouded several ongoing deals, including appliance maker Haier’s proposal to sell a stake in its Indian operations, as well as two other joint ventures awaiting approval under the Press Note 3 framework, the report added.

Indian contract manufacturers have also been engaged in discussions with Chinese firms for joint applications under the production-linked incentive (PLI) scheme for electronic components.

One major Indian company that had been evaluating a stake in Haier India has decided to pause its plans. A senior executive from the firm noted that it would proceed only after carefully assessing the evolving regulatory climate surrounding Chinese deals.

Reliance Industries and a consortium involving Bharti Group’s Sunil Mittal and private equity firm Warburg Pincus are reportedly leading the race, with Haier looking to divest 25–51% of its equity, valuing the business between $2 billion and $2.3 billion.

India has taken a cautious stance towards Chinese investments since the 2020 border clashes, issuing Press Note 3 guidelines requiring multiple government approvals for any investment originating from countries that share a land border with India. Only a few major Chinese companies have received such approvals, while others have either been forced to sell stakes or enter partnerships with Indian entities.

The report citing government sources suggested that Chinese companies may only be permitted to hold minority stakes in joint ventures under the PLI scheme, and only in cases where the components involved are critical and cannot be sourced elsewhere.