New Delhi, July 18 (IANS) Informal trade restrictions imposed by China on capital equipment, critical minerals, and skilled technical personnel, can adversely impact India’s electronics manufacturing ecosystem and constrain India’s deeper integration into global value chains (GVCs), leading industry body India Cellular and Electronics Association (ICEA) has said.

In a letter written to Minister of Electronics and IT, Ashwini Vaishnaw, the ICEA claimed that in a sector defined by competitiveness and tight timelines, three specific chokepoints being administered by the Chinese government in a planned and sequential manner, “aimed at undermining India’s ability to compete globally and produce at scale”.

India’s electronics and mobile manufacturing sector has seen a remarkable growth over the past decade, driven by forward-looking policy interventions and private sector investments and the shift of GVCs to India.

At the forefront of this growth is smartphone manufacturing, which reached $64 billion in production in FY25, with exports accounting for 38 per cent to $24.1 billion.

In turn, smartphone exports have propelled electronics from the seventh-largest export in FY20 to reach the third-largest export in FY25 reaching $38.6 billion – only behind engineering goods and petroleum.

“From ranking 167th among India’s exports in FY15, smartphones have now become the country’s single largest export. This success is a direct outcome of the Production Linked Incentive (PLI) scheme launched in 2020, and aligns with the Government’s vision of scaling electronics production to $500 billion,” the letter read.

China remains the dominant global source of high-precision tools and specialised machinery – an outcome of three decades of industrial clustering and deep GVC integration.

“For the electronics sector, including smartphones, this has created a high dependency on China for capital equipment,” the ICEA said in its letter.

For over a year, China has been restricting the export of equipment to India across multiple sectors, including heavy-duty boring machines and solar equipment, now extending the restrictions over the last 8 months to electronics manufacturing, the industry body alleged.

“These disruptions are leading to operational inefficiencies, impacting scale and above all raising costs of production, since producing this equipment locally or in collaboration with Japan or Korea costs 3-4 times higher than Chinese imports,” the ICEA highlighted.

Recent curbs by China on rare earth materials are also risking input shortages for smartphone manufacturers operating in India.

Alternate sources are scarce and, where available, economically unviable, difficult to scale, or logistically inefficient, according to the ICEA.

There have also been travel restrictions and recall of Chinese technical teams working in India.

“Over the last three months, China has taken two specific actions creating massive risks to India’s supply chains in this space — It has directed select companies that produce capex to wind up India operations and remove trained Indian professionals from their rolls, thus cutting off the technology transfer link that existed with China.

“More recently, they have asked professionals of Chinese origin working in Chinese, Taiwanese and Indian companies to return to China – midway through their assignments on an immediate basis. The number runs into hundreds,” said the ICEA in its letter.

The industry body said it is seeking an urgent meeting with the government to discuss measures needed to address the impact of informal Chinese restrictions on capital equipment, critical minerals, and skilled technical personnel.

–IANS

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