Tata Group, one of India’s conglomerates, is reportedly in advanced discussions to acquire a majority stake in Vivo’s Indian unit, signaling a strategic response to government initiatives promoting the involvement of domestic companies in critical sectors such as manufacturing and distribution.
According to sources cited by Moneycontrol, discussions between Tata and Vivo have progressed significantly, albeit with disparities in valuation expectations. While Vivo is seeking a higher valuation, Tata Group’s interest in the deal underscores its strategic intent, although no final agreement has been reached yet.
Chinese Smartphone Firms Under Scrutiny
This development unfolds against the backdrop of increased scrutiny faced by major Chinese smartphone companies operating in India. Allegations ranging from customs duty and income tax evasion to money laundering have underscored the need for greater transparency and accountability in the sector.
Shift Towards Local Partnerships
In April, Chinese smartphone giants Oppo and Vivo initiated discussions with several Indian companies in the handset sector to explore potential partnerships for their Indian operations. Companies like Dixon, Lava International, Optiemus, Bhagwati (Micromax), and UTL Neolyncs were reportedly part of these discussions, reflecting a broader trend towards forging local alliances.
Bhagwati (Micromax) Takes Over Vivo’s Manufacturing Facility
In a notable development, Bhagwati Products (Micromax) has assumed control of Vivo’s manufacturing facility in Greater Noida, signaling a shift towards domestic production. This move aligns with India’s ‘Make In India’ initiative, which aims to bolster local control in key sectors, including mobile phone manufacturing.
Encouraging Local Partnerships and Manufacturing
The Indian government’s push for greater local involvement in the mobile phone sector has prompted discussions around outsourcing smartphone manufacturing to domestic firms, leveraging incentives like the Production Linked Incentive (PLI) scheme. Chinese firms are urged to collaborate with Indian counterparts, appoint Indian executives, and maintain majority stakes in joint ventures.
Geopolitical Dynamics and Industry Responses
Amidst geopolitical tensions, Chinese mobile phone makers like BBK Group have forged partnerships with Indian manufacturers like Dixon Technologies and Karbonn Group to produce smartphones for brands like Oppo, Vivo, and Realme. Similarly, Xiaomi and Realme have engaged Indian entities for distribution, reflecting a broader trend of industry realignment.
Apple’s Manufacturing Expansion in India
Apple has significantly ramped up its manufacturing efforts in India, leveraging the country’s conducive business environment and mitigating supply chain disruptions. With approximately 7% of global iPhone production now based in India, Apple’s strategic move underscores the country’s growing importance as a manufacturing hub amidst evolving geopolitical dynamics.
