Smartphone, electronics makers seek urgent govt action as China chokes equipment, minerals, talent supply; warns serious risk to $32 bn exports

China, after decades of industrial consolidation and GVC integration, remains the dominant supplier of high-precision tools and machinery for global electronics.

India’s smartphone and electronics manufacturers have raised an alarm over informal but targeted Chinese restrictions that threaten to derail the country’s $32 billion export-linked manufacturing ambitions. Industry body ICEA has sought an urgent meeting with the government ministries, warning that these disruptions are placing India’s hard-won competitiveness and gains under the Production Linked Incentive (PLI) scheme at “serious risk.”

The restrictions, described by the industry as “carefully calibrated”, are said to be affecting the import of capital equipment, critical minerals, and the availability of skilled Chinese technical personnel, all of which are essential for electronics manufacturing at scale.
“If unaddressed, these disruptions could reverse recent gains and constrain India’s deeper integration into Global Value Chains (GVCs).

In a sector defined by competitiveness and tight timelines, three specific chokepoints being administered by the Chinese Government in a planned and sequential manner, all without any formal notifications and via verbal instructions to General Administration of Customs (GAC) without the involvement of Ministry of Commerce of the People's Republic of China (MOFCOM).

All aimed at undermining India's ability to compete globally and produce at scale,” Pankaj Mohindroo, chairman of ICEA said in a July 1 letter to Ashwini Vaishnaw, Minister of Railways, Communications, Electronics, and Information Technology (MeitY), Government of India.

The Indian Cellular and Electronics Association (ICEA), which represents major players including Apple, Foxconn, Lava, Dixon, Google, Flex, Tata Electronics, and Chinese brands like Oppo, Vivo, and Xiaomi, has also sent the letter to the Prime Minister’s Office, Ministry of External Affairs, and DPIIT.

Moneycontrol recently reported that Foxconn's decision to send over 300 Chinese engineers and technicians back home from its Indian facilities will impact Apple’s ambitious plan to ramp up iPhone production in India. Apple is activating contingency plans, including tapping engineers from other countries, to offset the impact of a labour crisis involving Chinese workers at its partner Foxconn’s iPhone factory in India, according to top government sources.

China, after decades of industrial consolidation and GVC integration, remains the dominant supplier of high-precision tools and machinery for global electronics. This dependency is now being exploited, ICEA claims, through opaque export restrictions and customs delays that are approaching a de facto ban, crippling manufacturing timelines and increasing costs.

For over a year, Chinese restrictions had already impacted sectors like solar and heavy machinery. However, over the past eight months, this pressure has extended to electronics, resulting in significant production bottlenecks.

“These disruptions are leading to operational inefficiencies, impacting scale and above all raising costs of production, since producing this equipment locally or in collaboration with Japan or Korea costs 3-4 times higher than Chinese imports,” Mohindroo said.

India’s electronics lines are heavily reliant on capital equipment from China, which also necessitates on-site support from Chinese experts. Their sudden unavailability, due to travel restrictions and recalls, is threatening both ongoing operations and future expansion plans.

Over the past three months, China has escalated actions by directing select capital equipment firms to wind up India operations and remove Indian professionals from their teams. It has also recalled hundreds of Chinese-origin professionals mid-assignment from Chinese, Taiwanese, and Indian firms.

“Again, this disrupts tech transfers, skills training and more importantly increases costs of production, adversely impacting India’s competitiveness. This is already disrupting not only technical operations but also technology transfer, scaling of production, and new product development, core to India’s ambitions of becoming a global electronics hub,” Mohindroo warns.

China’s dominance over rare earth elements and critical minerals has added another layer of vulnerability. These inputs, essential for EVs, smartphones, and broader electronics production, are now facing price distortions and constrained availability.

“Such actions will further add to India’s existing disability in manufacturing, especially given the cost-sensitive nature of the sector. This yet again chokes supply chains and adds further systemic fragility to India’s electronics ecosystem,” ICEA said.

Smartphone production in India touched $64 billion in FY25, with exports accounting for $24.1 billion—38% of total output. The sector’s rise has transformed smartphones into India’s top individual export, leapfrogging from the 167th rank in FY15 to the third-largest export category in FY25 after engineering goods and petroleum, aided significantly by the PLI scheme.

“The Interventions by the Government will ensure supply chain continuity, enable technology transfers, and—most importantly—preserve India's competitiveness as a manufacturing hub by keeping overall manufacturing costs low,” Mohindroo said.