China’s Export Restrictions Could Undermine India’s Manufacturing Goals, Says ICEA
The India Cellular and Electronics Association (ICEA) has urged the Indian government to take immediate action against China’s restrictive trade practices, warning that continued inaction could threaten $32 billion worth of annual electronics and smartphone production. ICEA claims these measures jeopardize India’s ambition to emerge as a global manufacturing hub, particularly in electronics.
China’s Covert Restrictions Disrupting Supply Chains
In a recent communication to the government, ICEA alleged that China has quietly imposed restrictions on the export of capital equipment, rare earth materials, and even technical personnel critical to India’s manufacturing ecosystem. These curbs, reportedly implemented through unofficial written directives, have led to delays in deliveries, higher costs, and reduced competitiveness for Indian manufacturers.
“These hidden restrictions are engineered to destabilize India’s supply chains and diminish the benefits achieved under schemes like the Production Linked Incentive (PLI),” the ICEA stated. Industry insiders estimate that if left unchecked, the disruptions could put India’s target of $32 billion in smartphone exports for FY26 at serious risk.
India’s Electronics Growth in Jeopardy
India’s smartphone production has seen a significant upswing since 2020, with FY25 witnessing a manufacturing output of $64 billion, including $24.1 billion in exports, a sharp rise from $26 billion in FY19. Once a minor category—ranked 167th in India’s export basket in FY15—smartphones have become one of the country’s top export sectors.
ICEA warns that if China’s strategic restrictions continue, it could derail this progress. India’s component and sub-assembly sector, which is projected to reach $145–155 billion by 2030, may face a slowdown due to disrupted supply lines and expensive alternatives to Chinese raw materials.
Expanding Restrictions and Rising Costs
China’s restrictions reportedly began in January 2025, targeting capital goods like high-end boring machines and solar power equipment. Over the past eight months, the measures have expanded to cover key electronic components. The curbs on rare earth mineral exports—critical for electronics and renewable sectors—have forced Indian firms to rely on costlier substitutes, often three to four times more expensive and less accessible.
These pressures have raised alarm across India’s electronics sector, threatening to erode the gains made through the PLI scheme and other government-led manufacturing incentives.
India-China Trade Gap Widens Despite Tensions
The growing trade imbalance with China, which reached $83.36 billion in 2023, reflects India’s heavy dependence on Chinese imports—especially in telecom, electronics, and machinery, which account for over 70% of total imports from China.
Even amid geopolitical strains, including the 2020 Galwan Valley clashes, India-China bilateral trade hit $138.48 billion in 2024, reinforcing China’s position as India’s largest trading partner. While the border agreement signed in October 2024 offered a temporary diplomatic thaw, ICEA believes that China’s trade strategy reflects its competitive rivalry with India.
ICEA Urges Swift Government Action
The ICEA has called for urgent diplomatic intervention, supply chain diversification, and strategic partnerships with other nations to secure alternative sources of equipment and materials.
Public sentiment on platforms like X (formerly Twitter) is sharply divided—some accuse China of deliberately stalling India’s rise in global manufacturing, while others emphasize the need for strategic autonomy and calibrated diplomacy.
Industry leaders stress that how the Indian government responds to these challenges will determine whether India can sustain its manufacturing momentum, reduce dependency on China, and successfully integrate into global value chains.