Bhagwati-Huaqin manufacturing joint venture gets government nod; to make smartphones for Vivo

Make in India

An inter-minitrial panel has approved a joint venture between domestic contract manufacturer Bhagwati Products Ltd and Huaqin Technology, paving the way for the Chinese original design manufacturer (ODM) to invest in the JV and acquire a minority stake.

Bhagwati Products director Rajesh Agarwal confirmed the development and told Moneycontrol that the joint venture would be finalised within a month.

Moneycontrol was the first to report on April 29 about the talks between Huaqin Technology and Bhagwati Products Ltd.

Shanghai-based Huaqin Technology, the world's largest design manufacturer of mobiles, tablets and laptops, has been for several years trying to enter India, one of the fastest-growing mobile markets, through a joint venture as an ODM and electronics manufacturing services (EMS) player.

The Chinese company held discussions with Lava International in 2022 but the plan didn’t materialise for several reasons, including an Enforcement Directorate probe for alleged money laundering.

The JV with Huaqin will help Bhagwati secure business from India's second-largest brand, Vivo, which is looking to shift some of its manufacturing to India under the production-linked incentive (PLI) scheme.

Bhagwati will use its PLI approval to pass on the benefits it receives from the government to Vivo, sources said.

Once finalised, the joint venture may explore the tablet and laptop manufacturing opportunity, they said.

Many multinational companies want to make tablets and laptops locally through PLI-approved companies.

Vivo's manufacturing facility in Greater Noida has been taken over by Bhagwati Products (Micromax). The company has begun hiring and will soon start producing smartphones for Vivo through its original design manufacturing joint venture with Huaqin, the sources said.

The factory at World Trade Center, Techzone IT Park, was on lease and has been transferred to Bhagwati.

Vivo has shifted its manufacturing operations to its new 170-acre factory in Greater Noida, which will be fully operational in the coming days.

To stay competitive in a fiercely contested market, many multinational smartphone companies opt to outsource handset design and manufacturing to IDHs/ODMs.

Samsung, Xiaomi, Honor, Oppo and Vivo are among those to have outsourced parts of their portfolios globally.

Analysts say the trend is picking up in India, with companies partnering with ODM-EMS to make their smartphones available in the country.

Bhagwati Products benefits from the PLI schemes for smartphones, IT hardware, and air-conditioner components. In FY24, it missed its PLI targets for mobile handsets after it couldn't secure large orders from Chinese smartphone companies.

It has two units — Bhiwadi in Rajasthan and Hyderabad in Telangana — to make mobile phones and television sets. It has been manufacturing IT hardware at the facilities since 2020.

According to Counterpoint Research's latest report, Huaqin was the world’s top independent design house/ODM in 2023, with a 27.9 percent market share. It was followed by Longcheer and Wingtech, with 27.3 percent and 20.6 percent market shares.