The government has granted approval for a joint venture between the domestic white-label manufacturer Dixon Technologies (India) Limited and Vivo Mobile India (VMI) Private Limited. This became known after the first company notified the stock exchanges late on Thursday.
Details of Approval and Partnership
VMI is a subsidiary of the Chinese smartphone manufacturer Vivo. The approval for this joint venture was received by the government on July 8, as stated in the documentation submitted by Dixon to the stock exchanges. Both companies signed an agreement to establish the joint venture for the production of electronic devices, including smartphones, on December 15, 2024.
New FDI Rules
This approval is one of the first obtained under the revised conditions of Note 3 (Press Note 3). These changes allow ownership of up to a 10% non-controlling stake from countries bordering India through the automatic route. Previously, in March of this year, the Department for Promotion of Industry and Internal Trade (DPIIT) issued a notification simplifying Foreign Direct Investment (FDI) norms for countries sharing a land border with India.
JV Structure and Capabilities
Under the revised norms, investors from all such countries, such as China, can own up to 10% of non-controlling shares in Indian companies without requiring government approval, provided industry restrictions are met. However, DPIIT clarified that if an Indian company with existing foreign investments transfers ownership in the future, and the new beneficiary is from a country bordering India, including China, government approval will be required.
In the forming JV, Dixon Technologies will hold a 51% stake, and Vivo Mobile India will hold 49%. The parties emphasized that neither company will own shares in the other. Although the new JV will produce smartphones for Vivo, Dixon noted that it will also be able to manufacture electronic products for other brands. The company stated that this collaboration will strengthen manufacturing expertise and high execution capabilities, as well as enhance the company's position in the Android smartphone ecosystem in India in line with Dixon's strategic goals.