China came on its knees in front of India (File )
The whole world was thinking that America and its President Donald Trump would bring China to its knees. But this did not happen. The dragon has come to its knees, but this work has been done by India. Taking advantage of the tariff war, Chinese companies have been convinced to accept all those conditions for investing in India, which the Chinese companies were reluctant to do for a long time. People aware of the matter told that Shanghai Highly Group and Haier are among those Chinese companies which have agreed to accept the terms and conditions of the Indian government for expansion in India.
The key condition includes maintaining a minority stake in joint ventures. For which Chinese companies were not ready earlier, but they have been persuaded to do so amid rising US tariffs. He said that if Chinese firms are excluded from that market, their presence in India will be important. After the violence broke out at the border in 2020, New Delhi had adopted an indifferent attitude towards Chinese investment. People with knowledge said that Shanghai Highly, one of the largest compressor maker companies in China, has resumed talks with Tata Group's Voltas for a manufacturing joint venture and has now agreed to a minority stake.
Another major player, Haier, which ranks third in the Indian electronics market by sales, has agreed to sell a majority stake in its local operations; Rajesh Agarwal, director of Bhagwati Products, a telecom and electronics contract maker, was quoted in a media report as saying that there has been a complete change in the attitude of Chinese companies, who are now quite comfortable holding minority stakes in Indian joint ventures or forming technology alliances.
He said that Chinese companies do not want to lose their business because India is a big market and there is scope for export under the tariff regime. The PLI scheme is also proving to be very effective. Which will make the production cost neutral compared to China. He was referring to the production-linked incentive scheme for electronic components, which the government has recently announced.
Haier was earlier planning to sell a minority stake of up to 26 per cent to a strategic partner as it is unable to invest money and expand its business in India as the government is not encouraging foreign direct investment (FDI) from China. But the stake sale process, which began last October, was delayed. Industry officials said Haier is now in talks with several Indian companies and private equity funds to sell up to 51-55 per cent stake.
According to industry experts, as Trump's tariffs will make Chinese products very expensive in the US, Chinese companies do not want to slow down their growth in India and have agreed to all the conditions of the government. The government has indicated that it will approve joint ventures with Chinese companies if they have a minority stake, the board is predominantly Indian and the venture provides value addition or brings in new technology needed to increase local production.
Shanghai Highly is also open to a technical alliance under which it will transfer production lines and tech. A joint venture between Voltas and Shanghai Highly, in which the Chinese company was to have 60 per cent ownership, was cancelled two years ago. As per the rules of Press Note 3, any FDI from a unit of a country sharing a border with India requires government approval. This was targeted at China and came amid rising tensions. Shanghai Highly has also recently formed a technical alliance with PG Electroplast to make AC compressors, under which it will share technology. There is no equity clause in the agreement. PG is setting up a plant with a capacity of 5 million units per annum near Pune for Rs 350 crore.
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