Indian conglomerate Reliance Industries (RELIANCE) said on Thursday it would invest 16.7 billion rupees ($220.70 million) to create a joint venture (JV) with U.S.-listed Sanmina Corp (SANM) for making electronic products in the Asian country.
The JV aims to make hardware for 5G communications, cloud infrastructure, healthcare systems, clean technology, and defense and aerospace, Reliance said in a regulatory filing.
The deal comes as India pushes for more investment in the manufacturing sector in a bid to establish the country as a global electronics production hub. India has offered about $30 billion in incentives to woo electronics manufacturers to set up shop in India.
Billionaire Mukesh Ambani’s Reliance will hold a 50.1% stake in the JV after the investment in Sanmina’s existing Indian entity through a Reliance unit. Sanmina will contribute its existing contract manufacturing business to the JV.
The JV will service both domestic and export markets, Sanmina Chief Executive Officer Jure Sola said in a statement.
All manufacturing will initially take place at Sanmina’s campus in the south Indian city of Chennai, with an option for expansion in other manufacturing sites within the country.
Sanmina, whose Indian entity Sanmina SCI India Private Ltd raked in revenue of about 12.3 billion rupees for the fiscal year ended March 31, 2021, looks to scale up its existing footprint in India with the deal.
Reliance has in recent years diversified away from its mainstay oil business, building its presence in the retail and telecom industries. It last year unveiled an aggressive plan to foray into green energy.
Reliance shares rose as much as 0.7% after the deal on Thursday, before paring gains to trade marginally lower by 0416 GMT.
($1 = 75.6700 Indian rupees)
09:30 Mar 03, 2022 Reuters