Answer

Introduction

India’s ambition to become a global manufacturing hub is central to its economic strategy. However, recent strategic moves by China, particularly the withdrawal of its technical personnel and restrictions on exports of critical materials and equipment, reveal how deeply India’s aspirations are entangled with foreign dependencies. These actions have profound implications for India’s industrial resilience.

Body

Implications of China’s Withdrawal of Technical Expertise from India’s Electronics Sector

• Stalled Technology Transfer: The recall of 300+ skilled Chinese engineers from iPhone manufacturing units undermines India’s access to tacit manufacturing knowledge and operational excellence.
  Eg: These engineers were key to setting up Foxconn’s iPhone 17 production lines in Tamil Nadu and Karnataka.
• Disruption in Electronics Manufacturing Expansion: India’s reliance on foreign technicians for advanced production systems exposes vulnerabilities in scaling high-tech manufacturing.
• Strategic Leverage through Rare Earth Export Restrictions: China’s control over rare earth elements and its export curbs aim to restrict India’s access to critical inputs for electronics and EV sectors.
  Eg: Gallium, germanium, and graphite exports to India are facing tightened restrictions, affecting chip and battery production.
• Informal Trade Barriers Increasing Operational Risk: China employs non-transparent tools like administrative delays and verbal bans to restrict capital equipment exports.
  Eg: High-end machinery, including boring machines and solar panel equipment, face unexplained shipment rejections to India.
• Increased Costs and Investment Hesitation: Disruptions lead to cost escalations and deter both foreign and domestic investors from committing to Indian manufacturing.
  Eg: Supply chain unreliability has made India less attractive for global manufacturers relocating from China.
• Preservation of Chinese Export Dominance: China views India as a potential competitor and is acting to preserve its trade surplus and manufacturing hegemony.
  Eg: China’s $1 trillion trade surplus is being defended by undermining India’s rise in high-value sectors.
• Strategic Vulnerability in Friend-Shoring Narrative: Despite Western intent to diversify supply chains, recent U.S. tariff hikes on Indian goods show that India’s role is not guaranteed.
  Eg: U.S. tariffs of 50% on Indian exports weaken India’s global positioning, even as China gets a 90-day exemption.

Positive implications of China’s withdrawl

• Push for Self-Reliance and Indigenous Capability Building:The exit of Chinese experts exposes overdependence and can drive domestic R&D, skilling, and tech transfer under Atmanirbhar Bharat.
• Diversification of Supply Chains and Strategic Partnerships:It pushes India to diversify supply chains by deepening ties with trusted partners like Japan, South Korea, Taiwan, and the West.
• Boost to Indian Startups and MSMEs in Electronics: The vacuum left by Chinese experts may open up opportunities for local startups, design houses, and MSMEs to provide services, leading to ecosystem strengthening and job creation.
• Acceleration of Government and Industry Collaboration: China’s exit may accelerate government and industry efforts to fast-track PLI schemes and the Semicon India mission for electronics manufacturing.

Policy Measures to Insulate Core Economic Interests and Build Industrial Resilience

• Invest in Indigenous Skill & Technology Ecosystems: India must prioritise developing its own pool of skilled manufacturing technicians and R&D capacities.
  Eg: Expansion of Centres of Excellence in semiconductor and electronics manufacturing can reduce reliance on foreign experts.
• Secure Strategic Raw Materials through Diversification: India should diversify rare earth sourcing from countries like Australia, Vietnam, and Africa.
• Strengthen Domestic Manufacturing Capabilities: Focus on creating vertically integrated supply chains from component manufacturing to final assembly.
  Eg: India’s Production-Linked Incentive (PLI) schemes for electronics and semiconductors aim to build self-reliance.
• Establish Sovereign Innovation in Strategic Sectors: In critical tech like AI, EVs, and semiconductors, India must accelerate home-grown innovation.
  Eg: C-DAC and DRDO-led initiatives in supercomputing and indigenous chips must be funded and fast-tracked.
• Build Strategic Economic Alliances: India should deepen trade and supply-chain partnerships with like-minded democracies to reduce strategic dependency on China.
  Eg: The Supply Chain Resilience Initiative (SCRI) with Japan and Australia is a step in this direction.
• Adopt a Dual-Use Strategy for Industrial Policy: National security and economic strategies should align to protect key sectors from foreign coercion.
  Eg: Restrictions on Chinese FDI in sensitive sectors post-Galwan reflect growing economic-security convergence.

Conclusion

India’s journey from a dependent importer to a potential global manufacturing leader faces sophisticated external resistance, especially from China. As recent events underline, industrial resilience can no longer be separated from strategic autonomy. India must now chart a new industrial roadmap focused on domestic innovation, de-risked global supply chains, and assertive economic diplomacy, a path not just to economic power but also national sovereignty.

DOWNLOAD PDF