India reportedly appears to be reconsidering its stance on allowing Chinese electronics companies to invest in the country on a case-by-case basis, signalling a potential relaxation of its previous reservations.

What Happened: The Ministry of Electronics and Information Technology (MeitY) recently reached out to Chinese air-conditioner compressor manufacturer Shanghai Highly (Group) Co regarding its proposed investment plans in India, the Economic Times reported, citing sources.

The planned investment, which involved a 60:40 joint venture with the Tata Group’s Voltas holding the smaller stake, had been stalled last year due to delays in government approvals. Shanghai Highly, one of the world’s largest AC compressor manufacturers, has reportedly responded to MeitY’s inquiries about reviving the plan, but is yet to receive a response.

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Overcoming Setbacks: Voltas, an applicant for the production-linked incentive (PLI) scheme for ACs, has been seeking a new partnership since the Shanghai Highly project was put on hold. The joint venture, initially slated to invest over ₹500 crore, faced setbacks amid heightened scrutiny of Chinese investments in India following border tensions.

However, there are indications of a potential shift in the government’s stance, with signals suggesting that some Chinese investment may be permitted in India on a case-by-case basis, particularly in the hi-tech electronic sector. This relaxation may be considered for investments that significantly contribute to domestic component manufacturing and technological advancements not readily available in other countries like South Korea or Taiwan.

Only After Elections: Industry executives note that any such relaxation would likely require the Indian partner to hold a dominant majority stake in the joint venture. While discussions are ongoing, companies anticipate that any concrete decision on this matter may be deferred until June after the formation of the new government following ongoing elections.

The Indian electronics and mobile phone industry has been advocating for more liberalised policies to allow Chinese investment, joint ventures and partnerships, along with relaxed visa norms for key Chinese professionals needed for new manufacturing plants. However, the final decision on these matters is expected to be made at a ministerial level following the formation of the new government.

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