The Indian government is going to allow Chinese companies to receive linked incentives (PLI) for the manufacturing of electronics under the Electronics Component Manufacturing Scheme. CNBC -TV18 reported that Chinese companies would be eligible for PLI only when they formed a joint venture with an Indian company.
This comes 2 days after the Union Minister for Electronics and Information Technology, Ashwini Vaishnaw, launched the portal and guidelines for the component manufacturing scheme. The scheme with a budget of Rs 22,919 crore was launched on April 8.
Conditions for Chinese companies
As per the CNBC-TV18 report, the Chinese companies have to form a joint venture with an Indian company to be eligible to receive policy-linked incentives, . Chinese companies cannot hold more than a 49 percent stake in the joint venture. Additionally, the control of the management of the joint venture must remain in the hands of the Indian companies.
One very important clause of the joint venture is the transfer of technology, the report indicated. According to the conditions, the joint venture is required to incorporate the transfer of technology from the Chinese companies.
Additionally, the joint venture needs to get approval under the Foreign Direct Investment (FDI) while forming the JV.
What is Electronic Component Manufacturing Scheme
The Electronic Component Manufacturing Scheme (ECMS) is a scheme launched by the government to boost the domestic manufacturing of electronic components like mobile and IT hardware, electro-mechanical devices, display modules, camera modules, etc.
The scheme is targeted to attract Rs 59000 crore from Indian companies as well as foreign investors and is supposed to create 91000 jobs in the country. Depending upon the component type, the scheme offers different incentives based on turnover and capital expenditure.
Several prominent Indian companies are planning to invest in the electronics component manufacturing. Dixon Technologies, one of the biggest electronics manufacturing companies in India, has planned to invest in the component manufacturing. Tata has also expressed their interest in investing Rs 2000 crores in electronics component manufacturing.