China’s restrictions threaten India’s manufacturing and growth

Source: The post China’s restrictions threaten India’s manufacturing and growth has been created, based on the article “Dealing with China’s weaponisation of e-supply chains” published in “The Hindu” on 15th February 2025

UPSC Syllabus Topic: GS Paper2-International Relations-India and its neighbourhood- relations.

Context: China is restricting its engineers and critical equipment exports to India, affecting Apple-Foxconn’s production. This move is to slow India’s manufacturing growth. India must develop local industries, invest in skilled labor, and attract private capital for long-term manufacturing independence.

For detailed information on Issue with China’s Export Restrictions read this article here

Why is China Restricting Engineers and Equipment to India?

1. China has stopped its engineers and technicians from working in Foxconn’s India facilities. It is also restricting exports of critical manufacturing equipment.
2. This move affects Apple-Foxconn’s production in India. China is using its dominance in advanced machinery and skilled workforce to slow India’s progress.
3. China is reacting to India’s growing role in global supply chains.
4. Many companies are adopting a China Plus One strategy to reduce dependence on China. India, Vietnam, and Mexico are gaining from this shift. China wants to protect its role in global production and maintain its geopolitical advantage.

How Does This Impact India’s Manufacturing Growth?

1. Disrupts Apple-Foxconn’s Production: China’s restrictions on engineers and critical equipment are slowing down manufacturing in India.
2. Affects India’s Global Manufacturing Ambitions: Apple-Foxconn is key to India’s goal of becoming a manufacturing hub.
3. Creates a Manpower Shortage: Foxconn is replacing Chinese engineers with Taiwanese workers.
4. Hurts Production of iPhones: In FY 2023-24, Apple assembled $14 billion worth of iPhones in India.
5. Exposes Dependence on China: India relies on China for specialized machinery and components.
6. Threatens Supply Chain Growth: India benefits from the China Plus One strategy but needs self-reliance.

What is India Doing to Boost Manufacturing?

1. Encouraging Apple-Foxconn’s Growth: In FY 2023-24, Apple assembled $14 billion worth of iPhones in India through Foxconn, Pegatron, and Tata Electronics.
2. Production-Linked Incentive (PLI) Scheme: The Union Budget 2024 increased allocation to ₹8,885 crore ($1.02 billion) from ₹6,125 crore ($0.70 billion).
3. Removing Import Duties: The Union Budget 2025 removed import taxes on mobile phone components and lithium-ion battery machinery.
4. Expanding the National Manufacturing Mission: India is promoting technological clusters and worker skill development programs for a self-sufficient electronics ecosystem.
5. Attracting Private Investment: India encourages private capital to develop domestic contract manufacturers.

How Do India-China Relations Affect This Issue?

1. India and China signed a patrolling agreement in October 2024 to ease military tensions in Ladakh.
2. However, China’s restrictions show that economic ties do not always depend on stable borders. Competition between India and China is expected to increase.

What Should India Do Next?

1. India must plan for long-term self-reliance in manufacturing. It should involve Apple and Foxconn to negotiate with China.
2. At the same time, India should:

• Develop a strong domestic supply chain for components and machinery.
• Invest in worker training and skill development programs.
• Support private capital to create Indian contract manufacturers.
• Expand the National Manufacturing Mission with more financial support.

3. India needs a holistic manufacturing ecosystem to reduce dependence on China and become a global leader in electronics production.

Question for practice:

Evaluate the impact of China’s restrictions on engineers and critical equipment exports to India on India’s manufacturing growth and its efforts to achieve self-reliance.