Tata Group Aims for Vivo India Majority Stake; Bhagwati Assumes Control of Greater Noida Factory

Tanushree Jaiswal Tanushree Jaiswal

Last Updated: 14th June 2024 - 01:50 pm

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Tata Group is negotiating to purchase a majority stake in the Indian division of Chinese smartphone manufacturer Vivo. Vivo has been looking for local partners due to government efforts to involve domestic companies in its operations, such as manufacturing and distribution.

"The negotiations have progressed to an advanced stage, focusing on valuations. Vivo is seeking a higher valuation than what the Tatas are currently offering. Although the Tata Group are interested in the deal, nothing has been finalized yet," a source familiar with the matter informed Moneycontrol. 

On April 8, Moneycontrol reported that Vivo and Oppo were in discussions with Indian companies regarding their local units due to increasing scrutiny in the country. 

Vivo's manufacturing facility in Greater Noida has been taken over by Bhagwati Products (Micromax), which has started recruiting staff and will soon begin producing smartphones for Vivo through its original design manufacturing (ODM) joint venture with Huaqin. According to sources, this joint venture between Bhagwati and Huaqin is awaiting approval from the Indian government. 

The factory at World Trade Center, Techzone IT Park, was leased and has now been transferred to Bhagwati, according to another source. Vivo has relocated its manufacturing operations to its new 170-acre facility in Greater Noida, which will become fully operational in the coming days. 

Tata Sons and Vivo India didn’t respond to queries sent by Moneycontrol. Bhagwati declined to comment.

The Indian government mandates that the Indian partner must hold at least a 51 percent stake in any joint venture with a Chinese handset company. Additionally, the government requires that the joint venture have local leadership and distribution. Industry executives believe this will ensure that domestic companies and executives have significant influence over the country's mobile phone industry, which is predominantly dominated by Chinese handset brands. 

Vivo is currently under investigation for allegedly transferring substantial portions of its revenue to its Chinese parent company to evade taxes. The Enforcement Directorate is also investigating the company for purported violations of the Prevention of Money Laundering Act (PMLA). 

Additionally, Tata Electronics is reportedly building one of India's largest iPhone assembly plants in Hosur, Tamil Nadu. This facility is being established to support Apple Inc's strategy of expanding its manufacturing presence in the country. The plant is expected to feature around 20 assembly lines and employ approximately 50,000 workers within the next two years, with the site anticipated to become operational within 12-18 months.

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