amid push from govt chinese handset brands begin talks with indian contract manufacturers

Amid a push from the government, Chinese phone brands have begun talks with Indian contract manufacturers, Telecom News, ET Telecom

Amidst a push from the government, Chinese phone brands have begun talks with Indian contract manufacturers

New Delhi: China’s top smartphone brands are in talks with Indian contract manufacturers to benefit from the approval status of the Production Linked Incentive (PLI) scheme. This comes amid a massive push by the Indian government to attract smartphone gamers from Asian neighbors to get more local gamers into their manufacturing ecosystem.

Leading Chinese mobile phone brands such as Xiaomi, Oppo, Vivo and Transsion are also in talks with the likes of Bhagwati (Micromax), Lava International, UTL Neolync, Optiemus Electronics and Dixon Technologies, all of whom have been approved under the PLI scheme, said a senior industry official.

The official said some of these talks revolve around setting up joint ventures. “A lot of these conversations are in the due diligence stages.”

Contract house company Bhagwati Products Ltd, a unit of Micromax, is in advanced talks with Chinese players, including Transsion, to locally manufacture their devices for the domestic market as well as for export.

“We are in advanced range of discussions with two Chinese companies. So, once that happens, we will be able to achieve 200-300% of our target under the PLI scheme,” Rajesh Agarwal, director of Bhagwati Products, told ET. He did not mention the names of the Chinese brands.

Transsion CEO Arijeet Talapatra told ET that the company is in talks with an Indian contract manufacturer, but did not disclose the name.

“A 6 percent cashback incentive is a huge benefit for us. If we want to better serve consumers, we must take advantage of the (PLI) scheme,” said Talapatra. “It’s a great scheme that, in a way, isn’t geared towards us right now. So, we have to do a joint venture with another brand. We’re planning on that.”

“We are talking about 75% of the production for local requirements and the rest for export,” Agarwal said.

He added that Bhagwati is also in discussions with these Chinese companies to bring their component ecosystem to India to increase local added value for job generation.

“We work with Indian partners in our supply chain as well as distribution network. We will look forward to strengthening these partnerships, as well as exploring new ways to expand their reach and promote local champions,” a Xiaomi spokesperson told ET.

ET’s emails to Oppo, Vivo, Lava International, UTL Neolync, and Dixon had not issued a response as of press time.

“We are in active talks with several players to manufacture different ranges of electronic products in India including Chinese players as well.” A Gururaj, MD, Optiemus Electronics.

An industry executive explained that the PLI scheme for smartphones has a minimum price of $200 for global brands, while for domestic manufacturers, there is no such floor. With prices of most smartphones Transsion selling under $200, the company was unable to participate in the government’s PLI scheme.

As a result, some Chinese companies have been looking to partner with local manufacturers that qualify for the PLI program to produce smartphones and claim a portion of the benefits. “In return, Transsion will bring some component partners to India as well,” said the industry executive.

Transsion already makes all the smartphones it sells in India locally, with three factories that assemble the smartphones in semi-knockout form, with most components sourced locally. However, the joint venture will allow the brand to benefit from incentives, which could help bring down the price of their smartphones even below the current price, the executive added.

A senior industry official said Xiaomi, which derives the bulk of its sales from the sub-Rs 10,000 smartphone category, is also in talks with Indian contract makers. The company, which currently manufactures its own smartphones, though Bharat FIH, a unit of Foxconn, declined to comment.

One of the key points in the negotiations revolved around the sharing of incentives provided under the PLI scheme. “Incentives are offered to the contract manufacturer. How and how much they will be shared with the customer is key,” another industry executive said.

ET reported on Dec. 27 that the Ministry of Electronics and Information Technology (MeitY) is working on an incentive scheme, with potential financial outlays of around Rs 10,000 crore to Rs 12,000 crore, to boost local manufacturing of high-end components that could go into products like smartphones, servers and personal computers. .

Bhagwati currently has a capacity of around 2 million phones and 1 million LED TVs per month at its two factories in Rajasthan and Hyderabad. It is working to increase the capabilities of these facilities, while also continuing to work with local partners to expand the ecosystem and create jobs in the country

The government is working with all the local and multinational companies to create more jobs and to bring a component ecosystem to India. “She also wants them to make India an export hub for smartphones,” said Agarwal of Bhagwati.

ET reported on November 2 that the government is open to allowing Chinese companies to enter the high-tech electronics sector if they set up manufacturing units in the country in partnership with local companies.