Tata Group in talks to buy majority stake in Chinese smartphone-maker Vivo's India unit: Report

The Tata Group is in talks with the Chinese smartphone-maker Vivo to buy majority stake in its India unit, according to a report.

The development comes amid the Indian government’s push for the inclusion of Indian companies in the operations of foreign mobile-makers in the country. Following the push from the Narendra Modi government, Chinese smartphone-makers like Vivo and Oppo are looking for Indian companies to be part of their operations in the country, including in the manufacturing and distribution processes.

Now, Moneycontrol has reported a source as saying that the Tata Group’s talks with Vivo are in “advanced stage” to acquire a majority stake in its Indian unit.

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“The discussions have reached an advanced stage where talks began around valuations. Vivo has been seeking a higher valuation than what Tatas are offering. The Tatas are interested in the deal, but nothing has been finalised yet,” said the source to Moneycontrol.

Micromax takes over production for Vivo

Even as Vivo engages in talks for selling the majority stake to the Tata Group, the company has handed over its factory in Greater Noida to Bhagwati Products, a subsidiary of Indian phone and electronics company Micromax, according to Moneycontrol.

The report said that Micromax has started hiring staff for the factory and will soon start manufacturing smartphones there for Vivo. The company will manufacture phone’s for Vivo under a joint venture (JV) with Chinese original design manufacturer Huaqin, which is the world’s largest ODM for mobiles, tablets, and laptops. The JV is yet to receive approval from the government, according to sources cited in the report.

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The move by Vivo to include Indian partners in the manufacturing and distribution process comes at a time when concerns have been raised about the monopoly of Chinese players in the telecommunications and electronics industries. The Indian government has pushed for a system where foreign companies operate in India through JVs where Indian partners have a majority stake. This is to ensure that Indian companies and executives have significant influence in the decision-making of the India units of these companies and a greater say in the broader telecommunications industry.

Vivo is under the scanner for multiple alleged offences. The company is accused of remitting its parent company in China of too much money to evade taxes in India. The Enforcement Directorate (ED) is investigating it for alleged violations of the Prevention of Money Laundering Act (PMLA).

Tata Group’s entry into electronics manufacturing

Over the past few years, the Tata Group has forayed into the electronics and computer manufacturing domains.

The Tatas are now contract-manufacturing iPhones for Apple and are also building the country’s first semiconductor fabrication facility in Gujarat in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC).

Last year, the Tata Group’s Tata Electronics took over Taiwan’s Wistron’s India operations for Rs 1,000 crore ($125 million). That made it the first Indian company to manufacture iPhones.

Currently, the Tata Group is in talks with another Apple contract manufacturer, Pegatron, to acquire a majority stake in India operations. The Pegatron has a iPhone manufacturing unit in Tamil Nadu near Chennai.

Moreover, Moneycontrol reported that the Tatas are also said to be constructing India’s largest iPhone assembly plant in Tamil Nadu’s Hosur. The facility upon its completion is expected to have around 20 assembly lines and employ around 50,000 staffers.