Reliance, which is to date the largest company in India by market value, is set to invest as much as $221 million (or ₹16.7 billion) in American electronics giant Sanmina, to jointly manufacture electronic products in India. Reliance will do so through its subsidiary, Reliance Strategic Business Ventures Limited (RSBVL). This joint venture will create a Manufacturing Technology Center of Excellence to support the product development and hardware startup ecosystem in the country. The Center will also promote research and innovation of leading-edge technologies.
Additionally, it will focus on creating high technology infrastructure hardware both for growth markets and across sectors such as communications networking, defense, cleantech, aerospace, medical and healthcare systems. While RSBVL will have a stake of 50.1% in the joint venture, the San Jose-headquartered Sanmina will have a stake of 49.9%.
The transaction has not been completed and is expected to close by this September. Both titans aim to create a “world-class” electronic manufacturing hub in India and initially manufacture at Sanmina’s 100-acre campus in Chennai. In the future, the site may be expanded to support future growth opportunities and to potentially expand to new manufacturing sites in India over time based on business needs.
The joint venture will be capitalized with over $200 million of cash to fund growth. Jure Sola, Chairman, and CEO, Sanmina felt that the joint venture would serve both the domestic and export markets. It also represented a major milestone in the “Make in India” initiative of the Indian government.
“For both growth and security, it is essential for India to be more self-reliant in electronics manufacturing in Telecom, IT, Data Centers, Cloud, 5G, New Energy, and other industries. Through this partnership we plan to boost innovation and talent in India, meeting both Indian and global demand,” said Akash Ambani, Director, Reliance Jio. He added that it would boost innovation and talent and meet both Indian and global demand.
Indian government has been pushing hard for self-reliance in the electronics manufacturing space, specially in a post-COVID world. It is slated to clock a growth of 30% in the next fiscal to be worth nearly ₹7 lakh crores. Add to that the almost $7 billion of incentives offered by the Indian government to boost the industry, and you have an idea why companies will increase focus in this sector.