• Partnership will be in the nature of JV and will be executed through investment by Reliance Strategic Business Ventures Limited (RSBVL)
• JV will create World-Class Electronic Manufacturing Hub in India, in line with the Prime Minister’s “Make in India” vision
• RSBVL will be the majority partner and will hold 50.1% equity stake in the joint venture entity. Remaining 49.9% will be owned by Sanmina
• Transaction will be executed by investment of upto Rs 1,670 crore by RSBVL in Sanmina’s existing Indian entity SIPL

In order to have deeper foothold in cutting edge manufacturing segment and benefit from opportunities arising under Make in India Program of the Government of India, Reliance Industries Limited (RIL) has announced its partnership with NASDAQ listed Sanmina Corporation. Partnership will be in the nature of JV and will be executed through investment by Reliance Strategic Business Ventures Limited (RSBVL), which is wholly owned subsidiary of RIL into to Sanmina’s Indian entity known as Sanmina SCI India Private Ltd, “SIPL”.

Sanmina Corporation is a Recognized as a technology leader and have facilities spread in key regions around the world. Global Electronics Manufacturing Services (EMS) market is one of the fastest growing manufacturing segments in the World and Sanmina is recognised as a leading integrated manufacturing solutions in this space. The joint venture will involve World class partners coming together and will be instrumental in creating a world-class electronic manufacturing hub in India, in line with the Hon’ble Prime Minister’s “Make in India” vision. JV will manufacture high tech infrastructure hardware focussed on advanced and tech-oriented segment of the economy like 5G, cloud infrastructure, data centres, healthcare systems, cleantech, defense and aerospace. According to RIL press release partnership will aim to create state-of-the-art ‘Manufacturing Technology Centre of Excellence’ for supporting the product development as well as for creating hardware start-up ecosystem in India. Centre of Excellence will promote research and innovation of leading-edge technologies.

Akash Ambani, Director, Reliance Jio and Jure Sola, Chairman and CEO of Sanmina, both leaders Commented on the deep significance and business prospects of the partnership.

Under the JV arrangement, RSBVL will be the majority partner and will hold 50.1% equity stake in the joint venture entity. Remaining 49.9% will be owned by Sanmina. Transaction will be executed by investment of upto Rs 1,670 crore by RSBVL in Sanmina’s existing Indian entity i.e. SIPL. In lieu of this investment shares will be issued to RSBVL by SIPL. Contribution by Sanmina will include bringing of existing contract manufacturing business to the JV.

For FY ended March 2021, revenues of SIPL stood at Rs 12.3 billion or US$165 million approx. Post investment, JV will be capitalized with over $200 million of cash to fund future growth and day-to-day business will be managed by Sanmina’s existing management team in Chennai. Transaction will be seamless from employee as well as customer perspective.

Sanmina’s 100-acre site in Chennai will serve as the initial manufacturing location. Sanmina plans to significantly increase the scope of business over time and expand its Indian manufacturing presence to meet local and worldwide demand for Hi-Tech equipment across industries, through this joint venture.

India is the world’s second-largest telecom market. In India, the telecom sector employs 4 million people directly and indirectly. Government has been extensively taking steps for making India a Manufacturing Hub especially in electronics manufacturing. A total of Rs 36,440 crore has been set up for the Production Linked Incentive (PLI) for large-scale electronics production. The scheme is expected to involve production of almost Rs 10.5 lakh crore in total, with exports accounting for more than 60% of production.

The Scheme for Promotion of Production of Electronic Components and Semiconductors (SPECS) offers a 25% capex incentive on capital expenditures for electronic component manufacturing, semiconductor / display fabrication, and capital goods. Cabinet has approved a total expenditure allocation of Rs 3,285 crore.

The Modified Electronics Manufacturing Clusters 2.0 project has a total approved expenditure outlay of Rs 3,762 crore. The Output Linked Incentive Scheme (PLI) for IT Hardware is estimated to result in additional production of up to Rs 3,26,000 crore, with more than 75% of that going to export. The scheme’s overall budget outlay, as authorised by the Union Cabinet, is Rs 7,350 crore.

According to media reports, K. Rajaraman, the telecom secretary, previously stated that the next round of telecom changes will be finalised in the first quarter of FY23. He stated that government will reduce litigation and review older laws.

Bureau Galactik Views