Vivo's majority stake to be acquired by Tata Group

Tata Group is in talks to buy the majority of Vivo's Indian business as Vivo looks for local partners to follow government regulations for local participation in operations. Talks on valuation are still ongoing, but Vivo wants a higher price than Tata is willing to provide. Vivo's Greater Noida plant has been taken over by Micromax's Bhagwati Products.

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.

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 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).

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).

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.