 "Dixon Technologies")
Dixon Technologies (India) on Tuesday signed two agreements — a joint venture (JV) and an acquisition, both with Chinese companies — in what could be a test case for the government on how to handle such proposals under foreign direct investment (FDI) rules for Chinese firms, following the implementation of Press Note 3.
The note states that any investment or transfer of ownership from countries sharing a land border with India, or where the beneficial owner is from that country, must go through the government approval route. This includes China — and many proposals of Chinese companies wanting to come through a JV with an Indian partner, or on their own, were neither cleared nor rejected.
With these two deals, Dixon now has five such tieups with Chinese companies — in each of which it holds a 51 per cent or higher stake — and they can proceed only if the government grants FDI approval.
The company has signed a binding term sheet to take a 51 per cent stake in Qtech India — a Chinese company (Qtech group) that already operates in the country and manufactures and supplies camera and fingerprint modules, Internet of Things (IoT) systems, and even automotive products to original equipment manufacturers in India. It currently has the capacity to produce around 5 million camera modules a month, supplying them to Vivo, Oppo, among others.
According to sources, Dixon will fork out around ₹500 crore to buy the stake and is expected to infuse fresh capital of around ₹300 crore to meet investment requirements to be eligible for the production-linked incentive (PLI) scheme for electronic components.
In the second deal announced on Tuesday, Dixon signed a binding term sheet to set up a JV with another Chinese company, Chongqing Yuhai Precision Manufacturing Co. — a global supplier of precision parts to HP — to manufacture precision mechanical and metal parts and components for a wide range of applications, from laptops and mobiles to IoT and automotive. The company will invest ₹250 crore to pick up a 76 per cent stake, while the remainder will be held by its Chinese partners.
With the two new agreements, Dixon has now entered into JVs with five Chinese companies over the past year and a few months. However, all are still awaiting FDI clearance from the government.
Says Atul B Lall, managing director and vice-chairman of Dixon Technologies (India): “The Qtech India acquisition aligns with our long-term vision to be a leading enabler in India’s electronics ecosystem. On Chongqing, we look forward to combining their deep expertise in technology with Dixon’s robust manufacturing infrastructure.”
For instance, in January this year, the company announced a JV with Vivo India to assemble mobile phones, in which it will hold a 51 per cent stake. Its JV with Longcheer Mobile (India) — a design and technology expert — to manufacture and sell mobile phones, in which Dixon holds a 74 per cent stake, has been pending clearance since April 2024. Another proposed JV is with HKC to manufacture display modules, in which Dixon will also have a 74 per cent stake.
However, there have been signs of a shift, especially after the government cleared JSW and other Indian investors’ acquisition of MG Motor India, in which they took a 51 per cent majority stake. Sources say that with the government proposing to fund over 150 companies under the PLI scheme for electronic components to build a vibrant global supply chain in India, it may open the door for home-grown firms to tie up with Chinese players for technology — provided they hold over a 51 per cent stake, have board control, and include clear clauses for transfer of technology.
Ensuring checks
Dixon has now entered into JVs with five Chinese companies
All ventures await clearance under postGalwan FDI rules After the Galwan skirmishes, India introduced Press Note 5, under which proposals from Chinese rims were held in abeyance
