Since the Covid pandemic, India has pitched itself as the world’s next factory floor — an alternative to China. Apple suppliers expanded in the nation. Semiconductor plans were announced. New industrial parks were promised.
The push was not without results — India’s electronics exports surged from $8.6 billion in 2015 to an all-time high of $47 billion in 2025. The Ministry of Electronics and Information Technology (MeitY) is expecting electronics exports to reach $120 billion by 2026 end.
But just as India doubles down on manufacturing, China has tightened its grip on the very supply chains that power those factories.
Beijing’s new State Council Decrees 834 and 835 — that restrict exports — have triggered anxiety across India’s electronics and auto sectors. Industry executives have warned that China’s restrictions on export of critical machinery and components could disrupt expansion plans, delay investments and expose India’s continued dependence on Chinese supply chains.
The concern is simple: can India truly scale manufacturing if China controls the tools needed to build those factories?
Executives at leading electronics manufacturing firms said discussions are already underway with Chinese suppliers to understand how the new rules will affect shipments of capital equipment and critical components. The domestic industry has also approached the government, flagging the potential fallout to MeitY.
The timing could not be worse.
China’s decision to curb exports — of critical minerals, rare-earth elements, and advanced manufacturing technologies — comes at a time when India is aggressively pushing import substitution and local manufacturing, facing the impact of Iran war, and an El Nino effect threatens the country’s agricultural income.
China’s Export Curbs: Centre’s Response
On Saturday, Union Commerce and Industry Minister Piyush Goyal said the government is preparing sector-specific investment promotion plans aimed at reducing dependence on “certain geographies” in critical supply chains.
The Centre is also betting big on industrial infrastructure. Under the Rs 33,660-crore Bharat Audyogik Vikas Yojna (Bhavya), the government plans to operationalise 50 industrial parks over the next three years.
But China’s latest move highlights a deeper vulnerability.
Modern manufacturing — from smartphones to electric vehicles — still runs heavily on Chinese machinery, electronics and raw materials. In the auto sector alone, around 26 per cent of India’s component imports came from China in FY25, much of it high-value electronics.
China’s New Export Rules: Pressure Across Sectors
“India’s automotive story is being rewritten in the supply chain, not just in the showroom,” said Mustafa Singaporewalla, founder of Cars Unlimited.
“Today’s cars can have up to 3,000 chips in them. You don’t just get higher prices if supply gets tight. You get delayed launches, longer waits, and compromised feature sets,” he said.
Singaporewalla warned that Beijing’s new rules are not just about trade barriers anymore. “China’s new supply chain decrees now let regulators punish companies and even their executives personally for shifting production out of China. That’s not a negotiation tactic. That’s a structural menace,” he said.
That pressure is already being felt across sectors.
Atul Vivek, CEO of NXTCELL Mobility, said the curbs are a reminder that India needs stronger domestic supplier networks and resilient supply chains.
“The electronics sector relies on global supply chains; hence it calls for a coordinated and balanced strategy for sustainable growth,” Vivek said, adding that India has an opportunity to deepen local manufacturing if policy support, logistics and research capabilities improve together.
Others see this as a defining moment for India’s manufacturing ambitions.
“Overdependence on a single manufacturing geography is no longer sustainable,” said Sanket Rambhia, managing director at LEDX Technology and Xtreme Media.
Rambhia said India cannot rely only on assembly-led growth anymore and must build deeper component ecosystems and long-term technology capabilities. “The domestic Active LED display market is already estimated at nearly Rs 2,000 crore and growing at 15-20 per cent annually, while global OEMs and ODMs are actively looking to diversify beyond China. This creates a significant opportunity for India to emerge as a credible manufacturing alternative.”
His company has already expanded manufacturing capacity in Gujarat with a 10,000 sq. mt. facility for Active LED displays. The larger opportunity, he said, is not merely import substitution but turning India into “a trusted global manufacturing partner”.
That, however, will take time.