Reliance Industries (RIL) on Thursday entered into an agreement to create a joint venture (JV) with US-based Sanmina Corp to manufacture electronics in India.

Reliance Strategic Business Ventures Limited (RSBVL), a wholly-owned subsidiary of the oil-to-telecom conglomerate, will create a joint venture through an investment in Sanmina's existing Indian entity - Sanmina SCI India Pvt. Ltd., according to an exchange filing.

The joint venture plans to build an electronic manufacturing hub in India, in line with Prime Minister Narendra Modi's "Make in India" vision.

Reliance Strategic Business Ventures will hold 50.1% equity stake in the joint venture entity with Sanmina owning the remaining 49.9%, the filing said.

The conglomerate plans to achieve this ownership primarily through an investment of up to ₹1,670 crore in new shares in Sanmina's existing Indian entity, while Sanmina will contribute its existing contract manufacturing business, the statement said. As a result of the investment, the joint venture will be capitalised with over $200 million of cash to fund growth.

The new entity is looking to prioritise high technology infrastructure hardware for growth markets, and across industries such as communications networking (5G, cloud infrastructure, hyperscale data centres), medical and healthcare systems, industrial and cleantech, and defense and aerospace, the filing said.

As part of the deal, the day-to-day business will continue to be managed by Sanmina's existing management team in Chennai. All the manufacturing will initially take place at Sanmina’s 100-acre campus in Chennai.

The deal is expected to close by September 2022, subject to regulatory approvals.

"For both growth and security, it is essential for India to be more self-reliant in electronics manufacturing in telecom, IT, data centers, cloud, 5G, new energy and other industries as we chart our path in the new digital economy. Through this partnership we plan to boost innovation and talent in India, meeting both Indian and global demand," said Akash Ambani, Director, Reliance Jio.

The joint venture will also create a manufacturing technology centre that will serve as an incubation hub to support product development and hardware start-up ecosystem in India.

"This joint venture will service both domestic and export markets and represents a major milestone in the Indian governments 'Make in India' initiative," said Jure Sola, chairman and chief executive officer of Sanmina.

Revenues for Sanmina SCI India stood at around $165 million for the fiscal year ended March 31, 2021. Through this joint venture, Sanmina expects to significantly grow the scale of this business over time and expand its Indian manufacturing footprint to serve the local and global demand for equipment across industries.

This comes at a time when billionaire Mukesh Ambani is looking to sell affordable 5G software solutions to global telecom service providers. Last year, Jio Plaforms and California-based Qualcomm, along with Reliance's wholly-owned subsidiary, Radisys Corporation, developed an open and interoperable interface compliant architecture-based 5G solution with virtualised radio access networks (vRANs), a way for telecom operators to run baseband functions as software.

Ambani had earlier talked about making India a global hub for 5G development and export. "Once Jio's 5G solution is proven at India-scale, we are excited by the prospect of exporting Jio 5G solutions to telecom operators across the world," Ambani had said.

Reliance Sanmina

Reliance-Sanmina JV to build electronics manufacturing hub in India