Reliance Industries Partners With Sanmina For Making Electronics In India
Reliance Industries Ltd. and Sanmina Corp. have agreed to jointly make high-technology electronics hardware in India as the government offers incentives to boost domestic manufacturing.
Reliance Strategic Business Ventures Ltd., a wholly owned subsidiary of India's largest firm by market value, will hold a 50.1% equity stake in the joint venture with Sanmina owning the rest, according to a statement. RIL's unit will achieve this ownership primarily through an investment of up to Rs 1,670 crore in new shares of U.S.-based company's Indian unit Sanmina SCI India Pvt.
“As a result of the investment, the joint venture will be capitalised with over $200 million (about Rs 1,500 crore) of cash to fund growth,” the statement said.
The partnership dovetails India's focus on locally making telecom equipment, electronics, medical devices, solar modules and batteries, and appliances, among others. The government has offered incentives worth nearly Rs 2.75 lakh crore across 13 sectors to boost domestic production.
The Reliance-Sanmina joint venture will prioritise manufacturing high-technology infrastructure hardware for communications, including 5G networking, cloud infrastructure, hyperscale data centres; medical and healthcare systems, industrial and cleantech, and defence and aerospace.
All manufacturing will initially take place at Sanmina's 100-acre campus in Chennai, opened in 2010, with site expansion or other locations being an option for future growth.
Sanmina's current contracts will be retained by the joint venture, and the two will also create ‘Manufacturing Technology Center of Excellence' that will serve as an incubation centre for product development and hardware startup ecosystem in India.
The transaction is expected to close by September 2022.
This comes amid the Indian government's focus on boosting indigenous manufacturing through production-linked incentives in telecom, large-scale electronics manufacturing, medical devices, renewable energy and white goods, among others. Across 13 sectors in total, the PLI schemes have an outlay of nearly Rs 2.75 lakh crore.
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