India-China electronics firms turn to tech tie-ups as JV rules delay deals

With regulatory curbs stalling Chinese investments in India, electronics firms like Voltas and PG Electroplast are exploring technology partnerships

Talks between Voltas and China’s Highly Group have failed to revive their previously scrapped joint venture (JV) for setting up a compressor plant in India. The Chinese firm has now offered a technical partnership in light of continued political tensions and regulatory bottlenecks, according to a report by The Economic Times.

 

A Voltas team reportedly visited China in late May to reopen talks, but Highly Group declined to pursue an equity partnership, citing delayed government approvals and geopolitical tensions. Instead, it offered a technology-sharing arrangement, an option it had previously rejected two years ago.

 

Firms explore non-equity deals under electronics manufacturing scheme

The development comes even as Indian firms ramp up efforts to secure partnerships under India’s ₹23,000-crore electronics component manufacturing scheme, aimed at reducing import dependence and boosting local production.

   

Efforts to secure Chinese equity investment continue to face hurdles under existing policy restrictions, such as Press Note 3, which requires multi-agency clearance for investments originating from neighbouring countries. However, companies on both sides appear more receptive to low-equity or non-equity collaborations.

 

Regulatory constraints on Chinese investment were introduced in 2020 following border clashes with Chinese troops. Despite this, industry leaders maintain that Chinese technology remains critical for building a globally competitive electronics manufacturing ecosystem in India.

 

Tech partnerships already forming

Industry executives say Indian firms are now prioritising access to Chinese technology over capital. Some partnerships even limit Chinese equity to 20–30 per cent, or exclude it entirely, the report said. 

  One such technical partnership has already materialised. Highly has already signed a technical deal with PG Electroplast to manufacture air conditioners. PG Electroplast also plans to invest ₹350 crore in a compressor plant near Pune with a five-million-unit annual capacity. 

Voltas, meanwhile, confirmed that its engagement with Highly Group is ongoing but clarified there are no confirmed plans for a joint venture at present.