The disruption in the Chinese supply of capital equipment, including high-tech machinery for Indian factories of tech giants, is gradually being resolved. This follows the intervention of the Ministry of External Affairs (MEA), which acted after the Ministry of Electronics and Information Technology (MeitY) requested its assistance, government sources said.
The MEA remains in continuous discussions with its Chinese counterparts, and the issue is being resolved, making it unlikely to impact the expansion plans of major players like Apple, Foxconn, and Lenovo, sources said.
“The issue has been taken up by the MEA with their Chinese counterparts. The MEA is aware of the situation on a regular basis, and things are improving and slowly changing. The issue has persisted for the past 5-6 months, and if it worsens again, the MEA will take further action,” a senior government official told Moneycontrol on the condition of anonymity.
An industry executive aware of the matter separately stated that affected companies, through their representative bodies, have been regularly apprising top Ministry of Electronics and Information Technology (MeitY) officials, who are coordinating with the MEA.
Several companies have been exporting capital equipment to support establishing or expanding manufacturing facilities outside China. Experts noted that this high-tech machinery is not readily available in India and must be imported from China to scale up capacity.
Since the second half of last calendar year, China began restricting exports of capital equipment essential for manufacturing, a move seen as an attempt to slow the global expansion of electronics companies like Apple and Lenovo through their contract manufacturing partners.
In response, industry bodies sought government intervention over shipment delays from Chinese ports. Moneycontrol reported on January 15 that Foxconn and other companies sought government assistance over delays in the shipment of specialised manufacturing equipment from Chinese ports.
A second source confirmed that the issue hasn’t been limited to electronics companies alone. Several other players in sectors such as EVs and solar panels have also faced challenges due to the Chinese government's restrictions on capital equipment exports, which are critical for manufacturing various products.
Queries sent to Apple, Foxconn, and Lenovo did not receive responses.
India has been trying to leverage the China Plus strategy of global manufacturers through various incentive programmes, such as the production-linked incentive (PLI) scheme for smartphones and IT hardware and telecom equipment.
China's Strategic Moves Amid Geopolitical Shifts
Experts believe that China is trying to protect its interests amid the geopolitical situation and the potential return of Donald Trump to the U.S. presidency. China’s measures also appear to be part of a broader response, possibly in retaliation for India’s restrictions on visas for Chinese officials or its selective approach to approving Chinese investments.
Meanwhile, Chinese and Taiwanese companies such as Foxconn, Pegatron, and Compal seek to mitigate risks by setting up manufacturing facilities overseas, including India.
This issue is unfolding alongside the Donald Trump-led U.S. administration’s imposition of a 10% tariff on Chinese imports, now extended to previously exempt categories such as smartphones, laptops, and other electronic products. Industry executives believe that this move will encourage Apple and Chinese companies like Lenovo to use India as a smartphone export hub.
Indian Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo told Moneycontrol that the U.S. tariffs on Chinese electronics present a significant opportunity for India. However, he emphasised that policymakers and the industry must act swiftly to capitalise on this chance.
India's Evolving Position on China
Notably, the Indian government has recently started opening up to Chinese companies and giving approvals to joint ventures, having imposed restrictions on Chinese investments after the Galwan border skirmish in 2020.
The Indian government last year approved Micromax-owned Bhagwati’s joint venture with Chinese original device manufacturer (ODM) Huaqin and Dixon’s stake purchase in Ismartu India, a subsidiary of China’s Transsion Technology Limited. Dixon has now entered into deals to form joint ventures with China’s HKC and Vivo to make display modules and smartphones, respectively.
Industry sources see a shift in the government’s stance toward Chinese companies as it gears up to support the change in the ecosystem through a component incentive scheme worth $3-$4 billion.
While blanket approvals for Chinese firms are off the table, the government is open to joint ventures (JVs) with Indian firms, provided there are appropriate checks and balances, sources added.
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