India Approves Chinese Joint Venture, Signals Shift in FDI Policy
The Indian government has approved a joint venture between Dixon Technologies and Vivo Mobile for manufacturing electronic devices and smartphones, marking a notable development in India-China economic relations. This decision comes alongside a waiver of customs duty on 85 goods used in manufacturing batteries and display assemblies, and reports that four Chinese power equipment manufacturing companies have been allowed to participate in government tenders for critical power projects.
These moves follow years of cautious policy towards China after the 2020 border clashes. In April 2020, India amended its FDI policy via Press Note 3, requiring government approval for investments from countries sharing a land border with India – a measure largely seen as targeting Chinese investments. Additionally, India decided not to join the Regional Comprehensive Economic Partnership (RCEP) in 2019, partly due to concerns over China.
Despite these restrictions, bilateral trade has deepened. Imports from China reached $131 billion in 2025-26, accounting for roughly half of India's non-oil goods trade deficit. However, FDI from China has remained minimal, totaling only $2.5 billion since 2000. The government's recent approval of the Dixon-Vivo joint venture aligns with recommendations from the Economic Survey 2023-24, which suggested either deeper integration with Chinese supply chains or encouraging greater FDI from China to benefit from the global shift away from Chinese manufacturing, known as the China+1 strategy.
In March 2025, the Union cabinet approved changes to the FDI policy to facilitate greater inflows from border-sharing countries, a precursor to the recent approvals. The joint venture is expected to boost domestic manufacturing and create jobs, though critics question the timing given ongoing geopolitical tensions.
