China’s Economic Tactics to Disrupt India’s Supply Chain Role

You must be logged in to get greater insights.

Context:

China’s recent restrictions on rare earth exports, skilled labour, and electronics inputs to India signal a strategy to undermine India’s manufacturing growth and global supply chain participation.

China’s Restrictive Measures

Targeting Critical Inputs:China has restricted exports of rare earths, delayed import of capital equipment, and limited skilled labour for India’s electronics and auto manufacturing sectors.
Operational Disruption:These measures raise operational costs, increase supply chain uncertainty, and hinder India’s ability to be a competitive global manufacturing hub.
Strategic Message to Global Firms:China aims to project India as an unreliable supply chain partner, thereby deterring foreign investment and undermining India’s economic and strategic security.

India’s Vulnerabilities in Electronics

High Import Dependence:In 2024–25, India’s electronics imports reached $98.6 billion, with 42% sourced from China, reflecting heavy reliance on Chinese inputs and equipment.
Trade Deficit Challenge:India’s trade deficit in electronics was $60 billion, largely driven by Chinese dominance in supplying critical manufacturing components.
Limited Alternatives:The specialised skills and equipment sourced from China are not easily available elsewhere, making short-term substitution difficult.

Policy Response and Way Forward

Production-Linked Incentive Measures:India’s PLI scheme for electronics aims to localise manufacturing, reduce import dependence, and address sector-specific disabilities.
Need for Coordinated Action:Effective mitigation requires high-level government intervention, inter-ministerial coordination, and quick policy responses to industry needs.
Global Value Chain Strategy:India must engage with global supply chain leaders like Apple to strengthen resilience, diversify sourcing, and integrate into non-China-centric production networks.

Practice Question:

“China’s recent economic measures against India reflect a strategic use of supply chain dependency as a geopolitical tool. Analyse the implications for India’s manufacturing sector and suggest policy interventions to ensure long-term supply chain resilience.” (250 words)

Tamil Nadu Renames Caste-Based Villages

Society

DOGE Reform and the Challenge of U.S. Fiscal Consolidation

International Relations Miscellaneous

Judicial Scrutiny of a Major Irrigation Project in Telangana

Polity & Governance

Underperformance of Fast Track Special Courts in Delhi

Polity & Governance

Integrated Disaster Preparedness Drill

Disaster Management

Decline of Left-Wing Extremism in India

Internal Security