NEW DELHI: India’s smartphone and electronics industry has raised serious concerns over what it describes as informal but targeted trade restrictions imposed by China. The India Cellular and Electronics Association (ICEA), in a letter to the government, sought swift policy measures to address these unofficial restrictions, which could derail the country’s $32 billion export-driven manufacturing ambitions.
As per the ICEA letter, India’s electronics manufacturing sector remains heavily reliant on China for high-precision tools, specialized machinery, and critical components. Over the past eight months, manufacturers have been facing informal export restrictions that are nearing the level of an outright ban. Shipments of essential equipment are either being withheld at the origin or delayed at Chinese ports, leading to operational inefficiencies, production delays and increased costs. Sourcing alternatives from Japan and South Korea is reported to be three to four times more expensive.
The letter also read that China also dominates the global production of rare earth elements and critical minerals essential to electronics manufacturing. Recent Chinese curbs on the export of these inputs have created a looming threat of supply shortages for Indian smartphone makers. According to the ICEA, alternatives are scarce, costly, difficult to scale, or logistically inefficient, exacerbating India’s existing cost disadvantages and creating systemic vulnerabilities.
Adding to the disruption, much of the capital equipment used in Indian electronics factories requires on-site support from Chinese technical personnel, who possess critical operational knowledge. In the last three months, China has reportedly instructed some capital equipment manufacturers to wind down operations in India and withdraw trained Indian professionals, severing key technology transfer links.
The ICEA has warned that unless the situation is addressed promptly, the gains made under the Production Linked Incentive (PLI) scheme—a key initiative aimed at transforming India into a global electronics hub—could be at “serious risk.”