China’s Underhand Methods Threaten India’s $32Bn Smartphone Exports Target: Industry Body Warns Govt

The India Cellular and Electronics Association (ICEA) has alerted the government regarding China’s informal trade restrictions that could possibly affect the country’s rising competiveness and threaten its target of $32 billion smartphone exports this fiscal year.

Addressing the government in a recent letter, the industry body said that China’s actions are aimed at disrupting India’s supply chains and as a result undermining its increasing relevance as a global manufacturing hub. They have also called on the Centre for an urgent meeting to address issues that are associated with the latest Chinese controls on capital equipment, critical minerals and skilled technical personnel.

China’s informal trade barriers, while note overt in nature, began with curbs on capital equipment last year, wherein they restricted exports of equipment across multiple sectors, including heavy-duty boring machines and solar equipment. Over the last eight months, these curbs have been expanded to include electronics manufacturing. Additionally, some of the Chinese companies were asked to shut their operations in India and some of them like Foxconn, Apple’s key manufacturing partner in India were asked to withdraw trained Indian personnel so that they could restrict technology transfers. Many Chinese workers employed at Chinese, Taiwanese or Indian companies have also been called back recently.

Further adding to the woes, the neighbouring country’s latest restrictions on rare earth exports risk input shortages for smartphone makers in India. Meanwhile, the industry body has noted that alternate sources of rare earth are scarce, economically unviable or logistically inefficient.

The Chinese curbs are leading to delays while inflating costs for manufacturers and are also being enforced in a planned, sequential manner without any formal notifications and only through verbal instructions, the association stated.

“While domestic production remains relatively insulated for now, export-linked manufacturing to the tune of $24 billion in FY25, projected to cross $32 billion in FY26 in smartphones has now come under serious risk,” the industry body stated in the letter.

Among its member companies, ICEA has Apple, Google, Motorola, Foxconn, Vivo, Oppo, Lava, Dixon, Flex, and Tata Electronics.

China’s restrictions come at a time when India is beginning to emerge as an alternative global hub for electronics manufacturing, especially for iPhone manufacturer Apple. Even five years ago, Apple used to make all its iPhones in China, but after 2020 they decided to leverage India’s production linked incentive (PLI) scheme for smartphone manufacturing. Following that, the US company through its contract manufacturers Foxconn (Hon Hai) and Tata Electronics has been rapidly shifting its production base to India and that now accounts for about 20% of global iPhone output.

Notably, Apple has been increasingly serving the US market for iPhones from India, moving away from China, amid trade tensions between Washington and Beijing, and incentives announced by the Indian government. Others like Google and Motorola too have started to export India-made smartphones to the US. South Korea’s Samsung too has a robust smartphone manufacturing capacity in India, even though Vietnam remains its primary hub for exports.

Thereby, since 2020 smartphone manufacturing in India has grown with the country producing $64 billion worth of devices in FY25, of which $24.1 billion were exported. This is in comparison to the $26 billion worth of domestic mobile phone production in FY19.

China’s latest curbs are putting India’s electronics manufacturing growth engine at a significant risk, ICEA said. “If unaddressed, these disruptions could reverse recent gains and constrain India’s deeper integration into global value chains (GVCs),” the letter added.

With an aim to boost local manufacturing of electronics parts, India has recently announced an incentive scheme with a funding of Rs 22,919 crore. Currently, China manufactures the majority chunk of electronic components globally, as per industry estimates. However, as per ICEA, India aims to grow its component and sub-assembly manufacturing to $145–155 billion by 2030.

In the letter, ICEA also highlighted, “The recent disruptions are leading to operational inefficiencies, thereby impacting scale and above all raising costs of production.” Producing this equipment locally or in collaboration with Japan or Korea costs 3-4 times higher than Chinese imports, they industry body added.

Commenting on China calling back its professionals, industry executives said that there are several of them and such a move disrupts technology transfers, skills training and significantly increases production costs, thereby impacting India’s competitiveness.