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The escalating India-China tensions impacting electronics manufacturers

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In Short:

Tensions with China have cost Indian electronics manufacturers $15 billion in production losses and 100,000 jobs in the last four years. Delays in issuing visas to Chinese citizens have hindered the industry’s expansion plans. Industry groups are urging faster visa approvals for Chinese executives needed for technology transfer. Chinese companies are hesitant to invest in India, impacting the supply chain and potential export revenue. The industry also seeks a PLI scheme for electronics component manufacturing.

New Delhi: Escalating tensions with China have resulted in significant losses for Indian electronics manufacturers. It is reported that the industry has incurred $15 billion in production losses and 100,000 job cuts over the past four years. This situation has been exacerbated by delays in issuing visas to Chinese citizens and ongoing government investigations into Chinese companies operating in India.

Impact on India

In submissions made to various ministries, the electronics manufacturing industry highlighted additional losses of $10 billion in potential exports and $2 billion in value addition. It is estimated that 4,000-5,000 visa applications of Chinese executives are pending, delaying the expansion plans of the Indian electronics manufacturing industry.

The India Cellular and Electronics Association (ICEA) and Manufacturers Association of Information Technology (MAIT) are advocating for faster visa approvals for Chinese executives, essential for technology transfer, production unit setup, and maintenance processes.

Industry Analysis

The ICEA expressed concern over the impact on Domestic Value Addition (DVA) due to strained relations with China. They emphasized the need for a balanced resolution to address industry concerns without compromising national security interests. The industry is seeking to move towards self-reliance by diversifying supply chains.

Despite efforts to improve competitiveness, industry executives noted challenges in attracting Chinese nationals for business activities in India. The geopolitical situation and scrutiny of Chinese businesses have hindered investments and development in the sector.

Future Prospects

The industry anticipates a rise in the demand for Chinese executives, particularly if the government approves a Production Linked Incentive (PLI) scheme for electronics component manufacturing. This would help reduce reliance on imports and enhance local production capabilities.

Imports of electronics, telecom, and electrical products have surged in recent years, with a significant portion sourced from China. The industry is urging for support in technology transfer and skilling initiatives to boost local manufacturing capabilities.

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