Tata Group drops plan to acquire stake in Vivo India over Apple's objection

Vivo had plans to sell a 51% stake in its Indian subsidiary to the Tata group. But Apple objected, as its devices are currently being produced by the Tata group in Bangalore

Tata group’s attempt to purchase a majority stake in Vivo’s India business has encountered hurdles due to objections from Apple, according to a report by The Times of India.
 

Vivo, which reported a revenue of Rs 30,000 crore for FY23, was planning to sell a 51 per cent stake in its Indian subsidiary to the Tata group. This move was part of Vivo’s strategy to ‘Indianise’ its operations amid government pressure, the report said.

However, Tata’s partner Apple was against the deal because its devices are currently being produced by the Tata group in Bangalore.

The report quoted a source as saying, “This has been one of the key reasons that scuttled the plan. For Apple, any deal of the Tata group, its key manufacturing ally, with Vivo would have meant a partnership with a competitor. This perhaps led to the talks breaking down between Tatas and Vivo.”

 

“We are denying this development,” a spokesperson of the Tata Group said, as quoted by the report.

Chinese companies are increasingly incorporating local partners into their Indian operations by selling controlling stakes. This strategy facilitates easier access to funding, which has become challenging due to the government's increased scrutiny of investments from countries sharing a land border with India. 

Moreover, partnering with credible local firms enhances their image as reliable participants in the government’s ‘Make in India’ initiative, potentially shielding them from regulatory actions and simplifying visa acquisition processes, the report added.

Recently, China’s SAIC group, which owns MG Motor, opted to sell a majority stake to Sajjan Jindal’s JSW group. Similarly, Sunil Vachani-led Dixon Electronics acquired a 56 per cent stake in Ismartu India, a subsidiary of Chinese Transsion Technology, known for brands such as iTel, Infinix, and Tecno.

Tata strengthens its electronics foothold

Meanwhile, the Tata group has been expanding its presence in the electronics sector. Its acquisition of Apple’s manufacturing partner, Taiwanese Wistron’s factories, marked a significant achievement. This move allowed Tata to enter Apple’s key supplier network, enabling the production of iPhones for both the Indian and global markets.
 

The partnership with Apple provided Tata with scale and increased its credibility in the global electronics manufacturing ecosystem, which includes major players like Taiwanese companies Foxconn, Pegatron, and Wistron, the report added.

Money laundering case against Vivo

The Chinese smartphone manufacturer Vivo is presently facing regulatory scrutiny from the Centre. The Enforcement Directorate (ED) is investigating the company in connection with a case under the Prevention of Money Laundering Act (PMLA). The ED has accused Vivo of allegedly defrauding the Indian government, leading to the registration of a money laundering case by the agency on February 3, 2022.