Vivo, a Chinese smartphone manufacturer, is close to selling one of its plants in Greater Noida to Bhagwati Products, Micromax's parent company, despite rising regulatory challenges, according to report.

With a turnover of about Rs 30,000 crore in FY23, Vivo led the Indian smartphone market in sales from January to March of this year.

Bhagwati will contract manufacture smartphones at the plant in partnership with Huaqin, the Chinese firm's original design manufacturing (ODM) partner, according to sources.

Moneycontrol could not independently corroborate the allegation, although it did disclose in early April that Oppo and Vivo were looking for possible partners for their India business.

According to the newspaper, the firms have requested government clearance for the agreement, which will benefit the "Make in India" program, which attempts to attract more global players to localize their operations.

Vivo already runs two factories in Greater Noida, and the agreement is for the company's first facility, which is expected to cover 14 acres.

According to the source, the new Vivo factory covers 169 acres and costs more than Rs 5,000 crore to build.

According to the paper, Vivo's relationship with Bhagwati Products matches its strategic objectives, allowing it to profit from the government's production-linked incentive (PLI) system for smartphones.

Bhagwati would pass on some of the government benefits to Vivo in exchange for the manufacturing contract. According to the report, requests submitted to Vivo remained unanswered.

Rajesh Agarwal, director of Bhagwati Products, declined to comment on the details but stated that both businesses had requested clearance from the electronics and information technology ministry for the transaction. He said that the procedure was still in its early stages.