Chinese smartphone manufacturer Vivo is currently facing the prospect of having to sell the majority of its shares in its Indian subsidiary due to pressure from the Indian government. According to foreign media reports, the Indian conglomerate Tata Group is in advanced discussions with Vivo India to acquire a minimum of 51% of the company's equity. Although significant progress has been made in the negotiations, the final transaction is yet to be confirmed due to differences in valuation expectations.

Vivo is seeking a higher valuation for its shares, while the Tata Group is looking to take the lead in the production and sales network of the joint venture after the acquisition, in line with the goal of localization. In a similar vein, another Chinese smartphone brand, OPPO, is also in talks with local enterprises for the potential divestment of its Indian subsidiary.

The acquisition by the Tata Group would fit into its strategy to expand its influence in the electronics manufacturing sector. The group has previously acquired a subsidiary of Wistron, which manufactures iPhones for Apple in India, and is currently in negotiations with Pegatron for a majority stake in its iPhone manufacturing plant near Chennai.

For Chinese smartphone manufacturers, the forced sale of a significant portion of their Indian subsidiaries is an unwelcome development. The Indian government is keen to ensure that joint ventures between Chinese smartphone companies and Indian partners have at least 51% of their shares held by Indian entities. Moreover, it is pushing for these Sino-Indian joint ventures to have local leadership and distribution channels.

Since 2022, the Indian government has been using laws such as the Foreign Exchange Management Act and the Prevention of Money Laundering Act to crack down on the operations of Chinese smartphone companies in India. Companies like Vivo, Xiaomi, and OPPO have all faced similar treatment, including asset freezes, tax investigations, and fines.

These actions by the Indian government are seen as a significant move to promote the development of local enterprises and enhance control over the smartphone supply chain. It is also part of Prime Minister Modi's "Make in India" strategy, which aims to strengthen the role of Indian companies in the entire supply chain. While Chinese companies may feel aggrieved, from the Indian government's perspective, these measures are beneficial for the development of domestic industries and the control of supply chains.