Three Deals, One Trap: How India's Biggest Industrialists Became Licensees In Their Own Country

The 630-acre site taking shape outside Aurangabad, in the dry plateau country of western Maharashtra, is built for scale. When complete, it will produce 400,000 vehicles a year, roughly one for every ten cars India currently sells annually. It is the centrepiece of JSW Group's automotive ambitions, a bet by Parth Jindal that an Indian conglomerate known for steel, cement, and energy can become a serious car manufacturer within the decade.

The ambition is legible in the site's dimensions. What is less visible is the fine print. The vehicles that will roll off these lines will ride on platforms designed by SAIC of Shanghai. Their EV variants will use technology licensed from Chery of Wuhu. Discussions with Geely of Hangzhou are ongoing.

A single Indian conglomerate is assembling a vehicle manufacturing ecosystem almost entirely from Chinese technological building blocks, each licensed, none owned. JSW will provide the capital, the land, the labour, and the market access. Its Chinese partners will provide the engineering that makes a car a car.

This arrangement, Indian money married to Chinese know-how, is not unique to JSW. Across automobiles, electronics, batteries, solar energy, and pharmaceuticals, Indian companies have spent the years since 2020 signing joint ventures, licensing agreements, and technology partnerships with Chinese firms at an extraordinary pace.

The deals differ in structure, sector, and scale. They share a common architecture: Indian capital and market access exchanged for Chinese technology. And in sector after sector, a common outcome is emerging. India is building factories. It is not, in any meaningful sense, building capability.

JSW's path into automobiles began in 2023 with the acquisition of a 35 per cent stake in MG Motor India for ₹2,650 crore, a holding that subsequently rose to 51 per cent. The deal looked like a takeover. Its architecture told a different story. SAIC, MG's Chinese parent, retained disproportionate voting rights, all vehicle intellectual property, and royalty arrangements on every unit sold. JSW held the equity majority. SAIC held the engineering that gave the equity its value.

The Chery licensing deal that followed in July 2025 went further. Unlike an equity investment, a licensing arrangement requires no approval under Press Note 3, the April 2020 regulation mandating government clearance for foreign direct investment from countries sharing a land border with India. Chery's technology would power JSW vehicles. Chery's technology would remain Chery's.

This is not, on its face, an unreasonable approach. Japanese and South Korean automakers licensed extensively in their early decades. India's own Maruti Suzuki partnership, now four decades old, began as a technology transfer arrangement. The question is whether licensing leads to absorption, whether the Indian partner eventually develops the capability to design and improve upon the licensed technology, or becomes a permanent rent arrangement, with the licensor capturing value indefinitely.

Consider the counter-example of Xiaomi. In March 2021, the Chinese smartphone giant announced it would build electric cars. It had no automotive experience, no car patents, no factory. It was, in other words, roughly where JSW stands today. But Xiaomi chose a fundamentally different path. Rather than licensing platforms from established automakers, it pledged $10 billion over ten years and built from scratch: its own 720,000-square-metre factory in Beijing, its own electric motor achieving 27,200 rpm (claimed as the world's highest for a production unit), its own battery integration architecture, its own autonomous driving system.

By February 2026, Xiaomi had delivered over 600,000 vehicles in just 22 months of sales. It had filed over 1,200 automotive patents. It had opened an R&D centre in Munich staffed with former BMW, Ferrari F1, and Polestar engineers. Its SU7 Ultra held the Nürburgring production EV lap record. Xiaomi's group R&D spending exceeded RMB 100 billion in five years, roughly $14 billion. The company that started from zero now designs electric motors that cost half what comparable Bosch units would, giving it 26 per cent gross margins that exceed Tesla's.

JSW holds zero powertrain patents. Its R&D centre in Pune is operational, and Jindal has committed to developing core technology in-house by 2027. But the distance between licensing a platform and designing the next one is not a gap that capital alone can bridge. BYD, which India rejected as an equity partner on security grounds in 2023, saw its Indian sales surge 88 per cent in 2025 without needing an Indian partner at all. Its vertical integration, from lithium mines to vehicle software, means it controls every layer of value creation. JSW needs multiple Chinese partners for a single car.

The electronics sector tells the same story at a different scale. Between December 2024 and July 2025, Dixon Technologies, India's largest electronics contract manufacturer, signed five separate joint ventures with Chinese partners: Vivo, HKC, Longcheer, Chongqing Yuhai, and Kunshan Q Technology. Every deal carried Indian majority ownership. Every deal was designed to pull a different layer of the smartphone supply chain onshore, not just final assembly, which India had already scaled, but the components that constitute the overwhelming majority of a handset's value.

The remaining gap is stark. India assembles more than 300 million smartphones a year, production value reaching $64 billion in FY25. But imported components still account for roughly 90 per cent of the bill of materials. Domestic value addition sits at approximately 15 per cent. Dixon's five JVs are an attempt to change this arithmetic: if Indian companies cannot yet design the components, they can at least manufacture them domestically, with Chinese partners providing process technology. Over time, Indian engineers will learn by doing.

It is a defensible theory. Something that happened at a Foxconn facility in Tamil Nadu in mid-2025 complicated it. Over several weeks, roughly 300 Chinese technical specialists departed Foxconn's Indian operations.

They did not take assembly line jobs with them. They took the tacit knowledge that makes high-yield electronics manufacturing work: the understanding of why a particular reflow oven temperature profile produces fewer solder defects, or how to adjust pick-and-place machine parameters when switching between component suppliers. Debugging cycles lengthened. Calibration gaps appeared on lines that had run smoothly for years.

India's response was telling: the Union Budget 2026-27 included a new portal to fast-track business visas for Chinese technicians. The same government that restricts Chinese investment through Press Note 3 was building administrative infrastructure to expedite Chinese workers, an acknowledgement that the restriction had created a knowledge vacuum only Chinese expertise could fill.

If electronics reveals the dependency in human capital, batteries reveal it in intellectual property. Eighty acres near Bengaluru International Airport house what may become the most consequential industrial facility in India's energy transition. Exide Industries' lithium-ion cell gigafactory, 6 GWh of capacity, built at a cumulative cost of ₹4,252 crore, is the closest India has come to manufacturing the component that will determine who captures value in the electric vehicle age. By January 2026, validation trials were under way, with commercial dispatches targeted for the end of FY26.

All of it runs on Chinese technology. Exide's 2022 partnership with SVOLT grants irrevocable rights to use and commercialise SVOLT's cell technology. The word "irrevocable" provides legal certainty. It does not provide technological independence. The agreement transfers the right to use the technology; it does not transfer the capability to advance it.

Exide and Amara Raja, India's two largest battery companies, hold a combined seven patents related to lithium-ion technology. CATL holds approximately 50,000. In the first nine months of 2025 alone, CATL invested over RMB 15 billion in R&D, has begun trial production of solid-state samples, and revised its 2026 production guidance to 1,300 GWh, roughly fifty times India's entire planned capacity. The ₹18,100 crore ACC PLI scheme, launched in 2021 to catalyse 50 GWh of manufacturing, had delivered just 1.4 GWh by January 2026, a 2.8 per cent achievement rate.

The pattern extends beyond these three sectors. In pharmaceuticals, India manufactures 20 per cent of the world's generic medicines but imports 70 to 72 per cent of its active pharmaceutical ingredients from China. For streptomycin, the dependency is total; for Vitamin B12, 98 per cent; for penicillin, 96 per cent.

In solar energy, module capacity surged from 38 GW to 120 GW between 2023 and 2025, but cell imports constitute 82 per cent of solar import value; the dependency simply migrated upstream. In wind energy, China's Envision holds 41 per cent of India's market. India's trade deficit with China reached $99.2 billion in FY2024-25.

Economists call this the smile curve, a U-shaped distribution of value along supply chains, with R&D and IP at one high-value peak, brand and distribution at the other, and manufacturing assembly in the low-value trough between them. Indian companies, across every sector examined here, occupy the trough. Chinese firms command the left-hand peak.

The painful irony is that China occupied the same position thirty years ago and escaped, not once, but repeatedly, and through multiple strategies. The state-led approach is well documented: Shanghai Volkswagen's mandatory localisation ultimatum, the high-speed rail programme that reverse-engineered Kawasaki's Shinkansen technology by insisting only three of 60 trainsets arrive fully assembled from Japan.

But the more instructive comparison for Indian industrialists is Geely. In 2010, Geely was a budget Chinese carmaker ranked dead last, 36th of 36, in the J.D. Power China quality survey. Its cars scored near-zero on crash tests. Toyota had sued it for copying its logo. That year, Li Shufu, Geely's founder, spent $1.8 billion to buy Volvo Cars from Ford, a company six times Geely's size. The acquisition was mocked as "the snake eating the elephant."

Li Shufu's strategic patience was extraordinary. He left Volvo's Swedish management entirely independent. He invested $11 billion over the following decade. He established CEVT, a joint research centre in Gothenburg staffed by 2,000 engineers from 30 countries, where Chinese and Swedish engineers co-developed the CMA platform that would underpin over two million vehicles. Chinese engineers learned not just specific technologies but entire engineering methodologies: how to run a vehicle programme, how to set safety targets, how to manage global suppliers.

By 2020, Geely independently developed the SEA electric vehicle platform at a cost of $2.65 billion, without Volvo's direct involvement. The technology flow then reversed entirely: Volvo's own EX30, one of Europe's best-selling EVs, rides on Geely's architecture. Geely's patent portfolio grew from 1,200 in 2009 to nearly 30,000 by 2024. From dead last in quality to second overall in 16 years. From a company whose cars couldn't pass a crash test to one whose platforms carry Volvo's safety reputation.

The Geely story took fifteen years of sustained R&D investment, roughly $14 billion over the decade, and a deliberate strategy of building institutional learning capacity, not just licensing products.

The Xiaomi story compressed something similar into three years through even more aggressive internal R&D. Both started from positions comparable to where JSW, Dixon, and Exide stand today. Both chose to treat partnerships as springboards for independent capability rather than permanent arrangements.

Indian companies are making a different choice. Not one of the JVs signed since 2020 contains published technology transfer obligations. Press Note 3 restricts equity but imposes no indigenisation requirements. PLI schemes offer financial incentives without demanding that licensees develop the capability to eventually replace the licensed technology. No single institution holds the mandate to think about Chinese technology dependency as a strategic whole, not the DPIIT, not the Ministry of Heavy Industries, not the Ministry of Commerce, all operating in parallel without coordination.

The window for changing course is narrower than it appears. China's July 2025 export controls imposed licensing requirements for overseas transfer of eight key battery technologies, targeted precisely at the kind of arrangements Exide and Amara Raja depend on. CATL is commercialising solid-state and sodium-ion chemistries that could render the technologies Indian companies are just learning to use significantly less competitive within this decade. In October 2025, China filed a WTO challenge against India's EV and automotive PLI schemes.

The Budget 2026-27 measures, rare earth processing corridors, expanded duty exemptions on battery equipment, the visa portal for Chinese technicians, are pragmatic. They are also, unmistakably, management of dependency rather than escape from it.

Escape would require something India has not yet attempted: mandatory indigenisation clauses attached to every partnership receiving approval or subsidies, sustained R&D spending beyond the current 0.64 per cent of GDP, and a unified economic security institution with the authority to negotiate technology absorption as a national strategy. India spends $76 billion on R&D annually; China spends $786 billion. Geely alone invested more in learning from Volvo than India's entire battery PLI allocation.

Outside Aurangabad, the 630-acre site continues to take shape. The buildings are rising. The equipment contracts are signed. The licensing fees are agreed. When the first vehicles roll off the line, they will carry an Indian brand, assembled by Indian workers, sold to Indian consumers. The platforms beneath them will have been designed in Shanghai, Wuhu, and Hangzhou.

Somewhere in Beijing, Xiaomi's factory produces a car every 76 seconds, on platforms it designed itself, with motors it patented, in a building it built. The question the Aurangabad site cannot answer, and that India has not yet seriously asked, is why the ambition stopped at the factory walls.