In a significant policy shift, an inter-ministerial panel has cleared a host of investment proposals in the electronics manufacturing sector, including those from Chinese companies and those with Chinese affiliations, according to a report by the Economic Times.

Key approvals include Luxshare, a leading Chinese electronics firm and a vendor for Apple, and a joint venture between Bhagwati Products (Micromax) and Huaqin Technology, where the Chinese company holds a minority stake. Several Taiwanese companies, listed on the Hong Kong Stock Exchange or with Hong Kong investments, have also received approval.

The inter-ministerial panel, which has convened twice so far, has approved seven-eight proposals across various sectors, with a majority in the electronics field. The panel plans to continue meeting every six to seven weeks to review and approve new investment proposals, ensuring compliance with specific conditions. These conditions include restrictions on Chinese nationals holding key executive roles and limiting Chinese companies to minority stakes in partnerships with Indian firms.

This decision marks a notable easing of the restrictions imposed due to the India-China border tensions and the associated scrutiny of Chinese investments. In response to the border clashes of mid-2020, India had mandated prior approval for investments from countries sharing a land border through Press Note 3 of 2020.

Mounting pressure from the electronics manufacturing industry seems to have influenced this development, as Chinese investments are crucial for broadening and deepening local supply chains. The sector has experienced significant challenges, including $15 billion in production losses and the loss of 100,000 jobs over the past four years due to escalating tensions and lack of clearances.

The Indian electronics industry has also advocated for a substantial production-linked incentive (PLI) package, ranging from Rs 30,000 crore to Rs 35,000 crore ($3.6-4.2 billion), to support the anticipated $75-80-billion demand for electronics components by 2026. This package aims to reduce import dependency and address the trade deficit with China.