China's Supply Chain Tactics and India's Electronics Industry

Why in the news?

In recent times, China's geopolitical tactics has disrupted India's electronics supply chain, particularly affecting Apple-Foxconn’s production.

What is China’s Supply Chain Restrictions?

• Restriction on engineers – In January 2025, China restricted travel for its engineers in Foxconn’s Indian facilities and curbed exports of critical manufacturing equipment, which led to:
  • Crippling Apple-Foxconn’s operations and impacting India’s manufacturing ambitions.
• Geo-political weapon – Beijing uses supply chain disruptions as a geopolitical weapon, leveraging its dominance in advanced machinery and electronics to slow India’s production.

What are the significance about Electronic Industry/Sector?

• Dynamic industry – The electronics sector is a vast and dynamic industry that encompasses the design, development, production, and distribution of electronic devices and components.
• Driving innovation – It's a critical part of the global economy, driving innovation and impacting nearly every aspect of modern life.
• 12 million jobs job creation – The electronics sector in India is expected to create 12 million jobs by 2027, including both direct and indirect roles.
• 3.4% of GDP – According to the department of commerce, under the Ministry of Commerce and Industries, the electronic sector contributes 3.4 % to the GDP.

What are the Key Components of Electronic Sector?

• Semiconductors – The backbone of modern electronics, used in everything from smartphones to cars.
• Consumer Electronics – Products for everyday use, including smartphones, computers, televisions, audio equipment and home appliances.
• Electronic Components – Individual parts that make up electronic devices, such as resistors, capacitors and transistors.
• Industrial Electronics – Equipment used in manufacturing, automation, and other industrial applications.
• Telecommunication – Infrastructure and devices for communication, including networks, mobile phones, and routers.

What are the Recent Developments in the Electronics Sector?

• Advancements in Semiconductors
• Chiplet Design – Improves performance and efficiency by combining smaller chips.
• Higher Transistor Density – Boosts chip performance and reduces power use.
• AI at the Edge – AI-powered devices enable faster, local data processing for automation and smart systems.
• Neuromorphic Computing mimics the human brain for efficient AI processing.
• Sustainability Focus – Efforts to reduce e-waste through better recycling and longer product lifecycles.
• Development of energy-efficient electronics to lower environmental impact.
• Internet of Things (IoT) Growth – Increasing connected devices drive data collection and automation.
• Industrial IoT (IIoT) improves efficiency in manufacturing and logistics.
• 5G & Future Connectivity
• 5G expansion – Enables faster speeds and new tech applications.
• 6G research – Is already underway for even greater connectivity.
• Flexible & Wearable Electronics
• Foldable displays – Are advancing for use in phones, wearables, and signage
• Wearable tech – Like smartwatches continues to evolve with new features.
• Quantum Computing Progress – Still in early stages, but has potential in drug discovery, materials science, and cryptography.
• Research is ongoing to develop powerful and stable quantum computers.

What are the Major Challenges in the Electronics Sector?

• Supply Chain Disruptions – Dependence on limited suppliers, especially China, leads to vulnerabilities.
• Geopolitical tensions and global crises impact the availability of key components.
• Semiconductor Shortages – High demand and limited production capacity cause delays in manufacturing.
• Need for more semiconductor fabrication plants (fabs) outside dominant regions.
• High Dependence on Imports – Many countries, including India, rely heavily on imported electronic components.
• Lack of local ecosystem for semiconductor manufacturing.
• Rapid Technological Changes – Constant innovation requires frequent upgrades and heavy R&D investments.
• Businesses struggle to keep pace with emerging technologies like AI, IoT, and 5G.
• E-Waste Management & Sustainability – Rising electronic waste due to short product life cycles.
• Need for better recycling processes and use of eco-friendly materials.
• Cybersecurity & Data Privacy Risks – Increased connectivity (IoT, 5G) raises risks of hacking and data breaches.
• Strengthening digital security measures is crucial.
• High Manufacturing Costs – Setting up advanced fabrication units and R&D centres requires huge investments.
• Labour and operational costs impact competitiveness.
• Skilled Workforce Shortage – Demand for skilled professionals in semiconductor design, AI, and quantum computing is growing.
• Need for better training and education programs.

What are the Government Initiatives to Boost Electronics Manufacturing in India?

• Production Linked Incentive (PLI) Schemes
• PLI for Large-Scale Electronics – Provides financial incentives for mobile phone and electronic component manufacturing to attract investments and increase domestic value addition.
• PLI for IT Hardware – Encourages local production of laptops, tablets, PCs, and servers to position India as a global IT hardware hub.
• Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) – Offers financial support for manufacturing semiconductors, electronic components, and display fabs to reduce import dependence.
• Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme – Supports infrastructure development for electronics manufacturing hubs with financial assistance for shared facilities and investments.
• Semicon India Program – Promotes semiconductor design and manufacturing by offering incentives for setting up fabs and attracting global semiconductor companies.
• Make in India – Encourages domestic manufacturing across industries, including electronics, by improving the ease of doing business.
• Digital India – Boosts demand for electronic devices and components by promoting digital technologies across various sectors.
• National Manufacturing Mission (NMM) – Aims to boost India’s manufacturing sector and increase its GDP share to 25% by 2025.
• It was announced during the Union Budget (2025- 2026).
• It supports small, medium, and large industries under "Make in India" while enhancing self-reliance and global competitiveness.

What is the Way Forward?

• Boost local manufacturing through incentives like India’s PLI scheme.
• Invest in R&D to stay competitive in emerging technologies.
• Enhance recycling & sustainability efforts to tackle e-waste.
• Strengthen cybersecurity measures to protect data and devices.

References

1. Economic Times - China's Supply Chain Tactics and India's Electronics Industry
2. Indian Trade Portal - China's Supply Chain Tactics and India's Electronics Industry
3. PM India GOV – Major Initiatives
4. PIB - Electronics manufacturing in India