Before getting government approval, Indian companies have started working with Chinese companies. Image Credit source: ChatGPT
Some Indian companies have planned to partner with Chinese firms. For this he is waiting for approval from the government. On the other hand, Chinese companies are also waiting for the approval of their government. Even after that, the companies of both the countries have started work on the projects even after not getting the approval. In fact, under Press Note 3, Indian companies need to obtain approval from several ministries for partnership with companies from countries sharing land borders. At present, the wait of many companies for this approval has increased from 3 months to 12 months. Because of which companies are beginning to feel that both their deadlines and budgets are increasing. In such a situation, thinking ahead, companies have started doing initial work for Chinese companies. Officials said they were hopeful that approval would eventually be granted.
However, these companies are putting pressure on governments for approval. The reason for this is also that Chinese companies are a major partner due to their technological capability, one of them said that if the approval is not given then it will go ahead alone. Under Press Note 3 (PN3), companies are required to obtain approval from multiple departments for any equity investment from a country that shares a land border with India, such as China. At the same time, Chinese companies need Beijing’s approval for equity or technological alliances with foreign partners so that important technical know-how and intellectual property remain with them.
Dixon and HKC Group
Dixon Technologies, India’s largest indigenous electronics contract maker, has started construction of a factory to manufacture display modules and has also ordered machinery, some of which has arrived at Indian ports. MD Atul Lal in media report that the proposed project with China’s HKC Corp has not yet received PN3 approval. This plant will be operated as a 74:26 joint venture (JV) between Dixon and HKC. Lal said in the ET report that the start of production at the plant is not dependent on PN3 approval, although this is an important partnership and PN3 approval is extremely important.
Lal told analysts last week that PN3 will definitely be approved for HKC, adding that the company is also confident of getting approval under the PLI scheme for electronic components. He further said that God forbid, if (PN3) approval is not granted, it will not affect the operation of the plant and commencement of production. It will remain a fully subsidiary company.
Electroplast Limited and Shanghai Highly Group
PG Electroplast Ltd, one of the largest contract makers of air conditioners, washing machines and televisions, has also started construction of an AC compressor plant near Pune through a technical tie-up with one of China’s largest compressor companies. Although PG has not yet revealed the name of the partner, the name of Shanghai Highly Group is coming to the fore. Although there is no equity clause, the deal has been awaiting approval from Chinese authorities for almost a year. PG Electroplast Chief Financial Officer Pramod Gupta told analysts last week that the company is in touch with its partner and the deal is expected to be completed very soon.
dixon and vivo
He said in the ET report that bilateral relations between India and China have improved, but at the ground level we are still not seeing any speed in getting approvals. This is delaying projects, increasing costs and affecting revenue projections. Dixon has also not yet received PN3 approval for its joint venture with Chinese smartphone brand Vivo, which the company was hoping to get by September. The company expects to produce 20 million smartphones under the Vivo joint venture in the next financial year. On the analyst call, Lal said that we feel we are close to the Vivo joint venture. But it is not so easy to give any definite deadline. Regarding the quantity of production to be received from Vivo and the risks associated with it, Lal said that everything depends on how soon we get this approval.