New Delhi: In a significant policy development for India’s electronics manufacturing sector, the Central government has approved a joint venture between Dixon Technologies (India) Limited and Vivo Mobile India Limited (VMI) to manufacture smartphones and other electronic devices in the country. The approval marks one of the first major clearances granted to a Chinese-linked investment in a strategic sector since India tightened foreign investment rules in 2020 following heightened geopolitical tensions.
The approval, disclosed through a filing with the Bombay Stock Exchange (BSE), allows the incorporation of a joint venture company in which Dixon Technologies will hold a 51 per cent stake, while Vivo Mobile India will own the remaining 49 per cent. The new entity has been established to function as an Original Equipment Manufacturer (OEM), primarily focusing on the production of smartphones and other electronic devices.
According to the regulatory filing, Vivo Mobile India received approval from the Government of India through a letter dated July 8, 2026, under the provisions of Press Note 3 of 2020 issued by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. The approval permits the incorporation of the joint venture company and Vivo’s subscription to its shareholding.
Press Note 3, introduced in April 2020 during the COVID-19 pandemic, made prior government approval mandatory for investments originating from countries sharing a land border with India. The policy was intended to prevent opportunistic acquisitions of Indian companies during the economic uncertainty caused by the pandemic and remained in place following the military standoff between India and China in eastern Ladakh later that year.
Although the investment restrictions technically apply to all neighbouring countries sharing a land border with India, they have largely impacted Chinese investments, as investors from Bangladesh and Pakistan are already required to seek government approval. Investments from countries such as Nepal, Bhutan, Myanmar and Afghanistan constitute only a small proportion of India’s overall foreign direct investment inflows.
The clearance for the Dixon-Vivo partnership comes at a time when New Delhi appears to be recalibrating its economic engagement with China amid evolving global trade dynamics and increasing uncertainties in India’s trade relationship with the United States. Industry observers view the approval as a pragmatic move aimed at strengthening domestic manufacturing while maintaining regulatory oversight.
The development also aligns with the government’s broader strategy to boost local electronics production and deepen value addition within India’s smartphone manufacturing ecosystem. Earlier this week, the Finance Ministry announced customs duty exemptions on 85 categories of capital goods used in lithium-ion cell manufacturing, along with key inputs required for display assemblies and wireless charging inductor-coil modules. These exemptions will remain in force until March 2029 and are expected to lower production costs while encouraging greater domestic manufacturing capacity.
Government officials have stated that the duty relief is designed to support manufacturing across multiple sectors, including automotive, medical and industrial electronics, while enhancing India’s competitiveness in mobile phone production.
The approval also follows another recent policy decision permitting four Chinese power equipment manufacturers with production facilities in India to participate in government tenders for critical power infrastructure projects. Those companies were granted exemptions from procurement rules that require firms from land-bordering countries to obtain prior registration before bidding for government contracts.
Earlier this year, the government also introduced revised guidelines establishing a 60-day timeline for clearing investment proposals from land-bordering countries in sectors such as electronic components, capital goods and solar manufacturing inputs. Under the updated framework, majority ownership and control of approved ventures must remain with resident Indian citizens or Indian-owned entities, a condition reflected in the Dixon-Vivo joint venture through Dixon Technologies’ majority 51 per cent stake.
The latest approval underscores the government’s attempt to balance national security considerations with its objective of expanding India’s manufacturing capabilities and reinforcing its position as a global electronics production hub.
