China's new supply chain control regime is emerging as a potential challenge to India's ambitions of positioning itself as an alternative global electronics manufacturing hub, with industry players reaching out to the Centre seeking support, according to a report.
Background of the Curbs
Beijing introduced the curbs in April as part of efforts to strengthen control over and protect its supply chains, according to people aware of the matter. Industry executives believe the move could affect supply chain stability, future investments and export growth, while also creating fresh hurdles for global and domestic manufacturers operating in India.
Impact on Global Brands
The development is expected to impact large global brands, including Apple and its suppliers in India, along with domestic companies seeking to build joint ventures with Chinese firms, the report said. Given the seriousness of the issue, the Indian electronics industry has approached the government seeking urgent assistance, according to people familiar with the matter.
"The government is aware of the developments and will see what best can be done after consultations with industry," a government official said on condition of anonymity. The official added that the matter could involve inter-ministerial consultations.
Dependence on Chinese Imports
Industry executives said that despite India's efforts to develop domestic supply chains and reduce external dependencies, imports of components, assemblies and capital equipment from China continue to remain critical for sustaining manufacturing and exports.
Beijing's Decrees
Beijing formalised the tighter controls through two decrees — 834 and 835 — issued last month. "These decrees significantly expand the authority of Chinese regulators to scrutinise, intervene and act arbitrarily in supply chain decisions taken by firms, including global players, which have either shifted or are planning to move their supply chains to India," a senior executive at one of the top electronics manufacturers told the publication.
The report said the measures place restrictions on information collection and supply chain diligence, potentially bringing routine compliance practices within the scope of regulation. The framework also proposes personal sanctions on corporate decision-makers. That means executives approving manufacturing diversification strategies, including setting up facilities in India, could face punitive action under the new rules.
Timing and Implications
A second executive noted that the timing of the move is significant as it comes shortly after India eased Press Note 3 restrictions for global firms to accelerate manufacturing investments under its China+1 strategy. "The Chinese don't want to cede space to India, and therefore, they have tightened controls, virtually stalling any efforts by global players to diversify," the executive said.
The Indian electronics industry is now seeking government support to navigate these challenges, as the new Chinese regime threatens to undermine India's manufacturing ambitions.
