NEW DELHI: After resisting to open up their supply chain and production work to Indian companies, Chinese firms have finally decided to give business to local makers. They will outsource crucial manufacturing processes and know-how to select homegrown companies, official sources have said.
The move comes after persistent nudging by govt and seen as a big victory for local players, many of whom need manufacturing contracts after having won benefits under production-linked incentive scheme for smartphones. The PLI payout comes only after companies fulfil specified commitments towards new investments and business activity.
Sources said Dixon Technologies and Karbonn are among frontrunners for getting new business from companies such as Oppo and Vivo.
Sources added that Dixon has "already bagged a large manufacturing order" from Oppo for making phones. "This has come through one of the original design manufacturers (ODM) of Oppo, which has now tapped into Dixon with an order size of around 5-6 lakh units per month," they said, requesting anonymity. When contacted, officials at Dixon Technologies refused to speak on the matter.
The new business for Dixon comes close on the heels of the company winning a large manufacturing order from Xiaomi to manufacture smartphones. Separately, Xiaomi had also signed an exclusive partnership with another homegrown electronics maker Optiemus to make audio products.
Karbonn, which had won PLI benefits under UTL Neolyncs, is also in "advanced discussions", though the company did not comment on the matter. "There are some other Indian electronics manufacturers also, who are being tapped into," sources said.
While Chinese companies such as Vivo and Oppo have their own manufacturing facilities in India, they also outsource work through their ODMs, such as, Longcheer, Huaqin, and Wingtech. These ODMs are crucial partners of smartphone ecosystem of Chinese companies and have a strong say in allotting manufacturing business. TOI reached out to Oppo and Vivo on the matter, but there was no response.
Govt had stepped into the matter after it found that Chinese companies were not ready to open up their supply chains to Indian players, despite virtually controlling the broader smartphones business in India. Except for Samsung and Apple, who cumulatively have around 25% of the Indian smartphone market, majority of the business is with Chinese makers, such as, Xiaomi, Oppo, Vivo, RealMe and OnePlus. "Since Samsung operates through its own factories that were set up long back, the only credible manufacturing business for enterprising Indian companies can come through the Chinese. We want more Chinese companies to give technology and manufacturing opportunities to such Indian players, especially as they will also come with PLI benefits," said official sources.
Even Apple has roped in the Tata group for making iPhones in India, adding the Indian company to list of manufacturing partners that includes Taiwanese Foxconn and Pegatron.
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