Dixon Partners with Chongqing, Kunshan Q Tech; Govt to Review Under FDI Rules

In a recent development, Dixon Technologies has partnered with two Chinese electronics companies Chongqing Yunhai and Kunshan Q Technology. While the move is aimed at boosting domestic manufacturing, it is now under the scrutiny of the Indian government.

According to The Economic Times, Dixon has entered into individual agreements with two Chinese electronic component makers: Chongqing Yuhai Precision Manufacturing Co Ltd and the Indian subsidiary of Kunshan Q Technology. These deals are aimed at manufacturing and selling components used in devices such as mobile phones, laptops, and other electronics.

Government Tightens Oversight

Under Press Note 3, issued in April 2020, India mandates prior approval for any foreign direct investment (FDI) coming from countries that share a land border with India. The intent is to safeguard Indian companies from opportunistic takeovers and ensure national security, especially in sensitive sectors like electronics and telecom.

Since Dixon is partnering with Chinese companies, the Department for Promotion of Industry and Internal Trade (DPIIT) will now examine whether the joint ventures meet the guidelines set under Press Note 3. The Ministry of Home Affairs and Ministry of Electronics and IT are also expected to be involved in the review process.

An official said, “Due process will be followed when their application comes under Press Note 3 rules.”

What the JVs Mean for Dixon?

Dixon’s JV with Chinese firms is part of the company’s broader strategy to expand component manufacturing in India. These ventures are expected to help Dixon access better technology and reduce import dependency for crucial electronic parts such as display modules and camera units.

The deals Dixon has signed with two Chinese firms to localize production and strengthen India’s position in the global electronics supply chain. But now, this strategic move could be delayed or altered, depending on the outcome of the government’s assessment.

Dixon electronics’ joint venture plans include setting up production units in Uttar Pradesh under the PLI (Production-Linked Incentive) scheme. These units were expected to go operational by early 2026 and generate hundreds of skilled jobs.

Industry Response

Industry watchers say that while the review could slow things down, it’s unlikely to derail the entire initiative. Experts believe that as long as the partnerships align with India’s strategic and security goals, the government may allow the deals to move forward with safeguards in place.

For now, all eyes are on how the government interprets the Dixon’s partnership with Chongqing and whether it fits within the evolving framework of India’s foreign investment policy.