Dixon Technologies, a contract manufacturer in electronic goods, said it has entered into a pact with Bharti Enterprises to form a Dixon-Bharti joint venture to manufacture telecom and networking products. It is planning to take the benefit of the government’s Rs 1.46-lakh-crore ($20 billion) incentive program to boost manufacturing in India. Dixon makes lighting, televisions, mobile phones, and home appliances for Xiaomi, Samsung, Voltas, LG, Flipkart, and Foxconn.
Dixon said its wholly-owned subsidiary- Dixon Electro Appliances or any other company identified by the parties will be the JV company that will manufacture telecom and networking products like modems, routers, set-top boxes, IoT devices, etc for the telecom sector/industry including Airtel. The joint venture—74% owned by Dixon and 26% by Bharti Enterprises—will file necessary applications with the Ministry of Communications or any other nodal agency to avail benefits under the PLI scheme.
In February this year, the Cabinet had approved the PLI scheme for telecom and networking products. Operational from April 1, 2021, the scheme will give telecom manufacturing a boost with an outlay of Rs 12,195 crores over 5 years, leading to enhanced production of more than Rs 2.4 lakh crore. It is expected that the scheme will bring an investment of more than Rs 3,000 crore and generate huge direct and indirect employment and taxes. The scheme will offer a 4% to 7% incentive to medium and small enterprises (MSMEs) on a minimum incremental investment of Rs 10 crore over five years. For other firms, the incentive ranges from 4% to 6% on an incremental investment of Rs 100 crore.
The PLI scheme is important since any industry needs support from policymakers at its stage of infancy, Atul Lall, managing director at Dixon said. “There would be some misses, but overall, the industry is going to emerge much more strongly because four-five years is a fairly long time for the industry to become more competitive,” he said. “I’m of the firm conviction that there will emerge a stronger electronics manufacturing industry.”
Saurabh Gupta, CFO, Dixon Technologies said, “We see them [Bharti] as our ideal long-term strategic partner who shares our core values: focus on quality, engineering prowess, innovation, and customer satisfaction & we intend to leverage each other’s strengths in manufacturing telecom and networking products.”
“We are pleased to join hands with Dixon Group to strengthen India’s electronics manufacturing sector and to contribute to the government’s vision of an Atmanirbhar Bharat. The telecommunications sector has played a pivotal role in facilitating the growth of the economy and is a key enabler of digital connectivity and Digital India. With Dixon’s excellent track record in the manufacturing industry and Bharti’s deep expertise in telecom, this Dixon-Bharti Joint Venture will be well-positioned to be a key player in its space,” said Deven Khanna, Group Director, Bharti Enterprises.