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Shanghai-based Huaqin Technology, the world's largest original design manufacturer (ODM) for mobiles, tablets and laptops, is in advanced talks with home-grown contract manufacturer Bhagwati Products Limited for a joint venture to foray into the Indian market, sources have told.

“The JV talks have reached advanced level of discussions, which are expected to be finalised after elections,” a source privy to the discussions . “Senior Huaqin executives currently are in India for the talks and due diligence.”

Huaqin, which had been eyeing an India entry for many years, felt this is the time is right to enter one of the world's fastest growing mobile markets as an ODM and EMS player through a joint venture route.

India's smartphone market is growing and will reach 200 million units annually in coming years. This offers Huaqin a big opportunity in India's EMS space,” a second source said.

The Chinese company held JV discussions with Lava International in 2022 but talks didn't materialise due to several reasons, including an Enforcement Directorate (ED) probe for alleged money laundering.

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The Huaqin joint venture will help Bhagwati secure new contract manufacturing business from Chinese brands such as Oppo, Vivo, and Realme, which are now looking to shift a portion of their production to India players under the production-linked incentive (PLI) scheme.

Bhagwati Products is a beneficiary of the PLI schemes for smartphones, IT hardware and air-conditioner components.

Bhagwati Products, which missed the targets under the PLI for mobile handsets last fiscal as it was unable to secure large orders from Chinese smartphones, has two factories —Bhiwadi in Rajasthan and Hyderabad in Telangana to make mobile phones and TVs. It has been manufacturing IT hardware at the facilities since 2020.

on April 8 that Oppo and Vivo are already discussing a deal with Dixon Technologies, another PLI-approved Indian contract manufacturer.

Once they come, they will bring their component ecosystem along with them. They are a big player in the market,” the second person said, suggesting their entry would give a push to the electronics component ecosystem.

Once finalised, the joint venture may also look to tap the opportunity in the tablet and laptop manufacturing space. Several multinational players are looking to locally manufacture tablets and laptops through PLI-approved companies.

Huaqin was the world's top Independent Design Houses/Original Design Manufacturers (IDHs/ODMs) in 2023, with a 27.9 percent market share followed by Longcheer and Wingtech with 27.3 percent and 20.6 percent, respectively, as per Counterpoint Research's latest report.

To stay competitive in a fiercely contested market, many multinational smartphone brands opt to outsource handset design and manufacturing to IDHs/ODMs. Brands such as Samsung, Xiaomi, Honor, Oppo and Vivo are among those to have outsourced parts of their portfolios.

ODM wars 

Analysts said the trend is also picking up in India, with brands partnering with these original design manufacturers or ODM-EMS (electronics manufacturing services) to make their smartphones available in the country.

As premium play gets stronger… OEMs are leaving the low end to ODMs and focus on high end.... These ODMs come with deep expertise in a segment where the margin is razor thin,” Tarun Pathak, research director at Counterpoint

WingTech, which works with brands in India, including several companies making handsets and tablets, is now reducing its market presence in India, leaving the space for two top ODMs - Huaqin and Longcheer, experts said.

Dixon Technologies' subsidiary Padget Electronics signed a pact with Longcheer Mobile India to manufacture and sell smartphones for large global brands using Longcheer's design and technology. The partnership gives Dixon access to Longcheer's customer base, which includes top Chinese smartphone brands in India.

Globally, these two ODMs dominate the market, and in India, they want to do the same," a third source said.

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