India clears Dixon Technologies-Vivo joint venture for smartphone manufacturing

Shares of Dixon Technologies rallied as much as 7% to their day’s high of Rs 14,680 on the BSE on Thursday after the Union Cabinet approved the Rs 1.27 lakh crore second phase of the India Semiconductor Mission (ISM) and a new Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS). The government will release the administrative notification for both schemes within the next fortnight, electronics and information technology minister Ashwini Vaishnaw said. "The government's conditionalities for incentives are aligned with the industry's perspective which focuses on building scale, making India globally competitive, and owning intellectual property," said Atul Lall, managing director at Dixon Technologies, a key beneficiary of the earlier PLI scheme.The scheme for mobile phones—billed as different from the production-linked programme that lapsed on March 31—will have a tenure of five years and disburse incentives based on domestic sourcing as well as design and R&D by Indian brands. The scheme will also offer incentives for export of smartphones.Decoding MPMSThe scheme outlines incentives for eligible sales in the range of 2.25% to 5%. There is an additional incentive of 1.5% for domestic sourcing of key components and another 3% for building an Indian brand with its own design and R&D.The government expects MPMS to help increase domestic value addition in smartphones to 40-45% by the end of the scheme from 24% now.Also read: Vivo-Dixon deal approval reveals India's new China playbookIt projects cumulative mobile-phone production of Rs 39 lakh crore and exports of Rs15 lakh crore during the scheme period, creating an estimated 600,000 new direct jobs.The previous PLI scheme helped production reach Rs 22 lakh crore and exports over Rs 7.5 lakh crore, creating 1.2 million jobs.The development comes just a week after the Centre expanded customs duty concessions on a range of machinery and components used in electronics manufacturing. Dixon Technologies, India's largest domestic contract manufacturer of smartphones, IT hardware and television sets, is expected to benefit from lower input costs. The customs duty relief is likely to improve unit economics, support margins and aid the company's continued expansion in its mobile and electronics manufacturing businesses. Dixon-Vivo JVLast week, Chinese smartphone brand Vivo Mobile India received the long-pending government approval to form a joint-venture partnership with Dixon for manufacturing of smartphones.Both companies had signed a binding term sheet in December 2024 under which the electronics manufacturer will hold 51% of the share capital, while Vivo India will have 49% share. The joint-venture entity will act as the original equipment manufacturer (OEM) of electronic devices including smartphones for Vivo Mobiles in India. The entity can also engage in manufacturing for other brands, Dixon said.What are experts saying?Emkay raised its target price to Rs 15,200 (11% upside) from Rs 13,477 while maintaining a Buy rating on the counter. The brokerage said regulatory approval for the 51:49 joint venture with Vivo removes a key overhang and paves the way for large-scale manufacturing of Vivo smartphones. It has raised its Vivo production estimates to 6.5 million units in FY27 and 18 million units in FY28, resulting in 14% and 17% upgrades to its FY27 and FY28 EPS estimates, respectively.Read more: Data center pipeline faces construction delays, cancellations to mount through 2027: BernsteinEmkay noted that Dixon already accounts for 45-50% of India's smartphone manufacturing capacity, with the Vivo JV expected to further strengthen its leadership. It also sees continued policy support for domestic electronics manufacturing, including the proposed Mobile PLI 2.0 scheme, as a key growth driver. The brokerage believes Dixon's strong return ratios, negative working capital cycle and robust cash generation justify its premium valuation and remains positive on the stock.Nomura has maintained its Buy rating on Dixon Technologies with a target price of Rs 13,813. It believes the regulatory approval for the joint venture improves volume visibility for Dixon, which currently accounts for around 18% of India's mobile manufacturing with approximately 33 million units in FY26. Assuming Dixon secures around 70% of Vivo’s production, Nomura estimates its annual output could rise to nearly 60 million units over the next few years, translating into a 35-38% market share. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Chinese mobile company Vivo plans to hive off its Noida-based manufacturing unit to its upcoming joint venture with domestic electronics manufacturing services firm Dixon Technologies and move to an asset-light business model in India, sources aware of the development told PTI. The government on Wednesday approved Vivo Mobile India's application to form a joint venture with Dixon Technologies. The approval came after about 18 months of signing a pact between the two companies. "Vivo's Noida manufacturing unit will become part of the JV and gradually the mobile company will move to an asset-light business model," a source aware of the development said. Email query sent to Vivo and Dixon in this regard did not elicit any immediate reply. Dixon Technologies will hold a 51 per cent stake in the proposed JV and Vivo Mobile India Private Limited (VMI) will hold 49 per cent stake. The JV company will carry on the business as an original equipment manufacturer (OEM) of electronic devices

The government has approved a proposed joint venture between domestic electronics manufacturer Dixon Technologies (India) Ltd and Vivo Mobile India Pvt Ltd, a subsidiary of Chinese smartphone maker Vivo.Dixon informed stock exchanges about the approval in a regulatory filing on Thursday, stating that the government granted clearance for the partnership on July 8. The two companies had signed an agreement on December 15, 2024, to establish a joint venture for manufacturing electronic products, including smartphones.The approval is significant as it is among the first major clearances under the revised Press Note 3 framework, which relaxed foreign direct investment (FDI) rules for companies linked to countries sharing a land border with India. Earlier this year, the Department for Promotion of Industry and Internal Trade (DPIIT) revised the investment norms, allowing investors from neighbouring countries such as China to acquire up to 10% non-controlling beneficial ownership in Indian companies through the automatic route, subject to applicable sectoral limits.However, government approval continues to be mandatory in cases where an Indian company with existing foreign investment undergoes a transfer of ownership and the new beneficial owner belongs to a land-bordering country.Under the Dixon-Vivo joint venture structure, Dixon Technologies will hold a 51% stake, while Vivo Mobile India will own the remaining 49%. Neither company will acquire any ownership stake in the other entity.The newly formed venture will manufacture smartphones for Vivo, but it will also have the flexibility to produce electronic devices for other brands, Dixon said.The partnership is expected to strengthen Dixon’s position in India’s growing smartphone manufacturing ecosystem and expand its capabilities in electronics production.Stock Of Dixon Technologies Gains Over 3% As Govt Approval For Vivo JV Nears Clearance “This association will bolster the company's manufacturing excellence and superior execution abilities. This partnership will further strengthen the company's foothold in the Android smartphone ecosystem in India in line with Dixon's strategic goals,” the company said.The collaboration comes as India continues to promote domestic electronics manufacturing through initiatives aimed at building local supply chains and reducing dependence on imports.The smartphone manufacturing sector has emerged as a key focus area under India’s broader electronics manufacturing strategy, with global companies increasingly looking to expand production capacity in the country.The Dixon-Vivo partnership is expected to contribute to India’s manufacturing ambitions while enabling Vivo to strengthen its production operations in one of the world’s largest smartphone markets.

Dixon Technologies today was up 4 per cent intraday as the company secured government approval to set up its joint venture (JV) with Vivo Mobile India (VMI).

Dixon Technologies' shares rose significantly after Vivo Mobile India secured government approval for a joint venture. This partnership will focus on manufacturing smartphones for Vivo within India. Experts foresee substantial production increases and strengthened market leadership for Dixon. The joint venture is expected to commence operations by September 2026. Dixon's strong financial metrics and policy support underpin its positive outlook.

Indian govt approves DixonVivo partnership for local smartphone manufacturing