The ongoing tensions between India and China are severely impacting India’s electronics manufacturing industry, leading to significant economic losses and job cuts. Here’s a summary of the situation:
Key Losses:
- $15 billion production loss: The Indian electronics sector has suffered a substantial decline in production over the past four years, primarily due to issues stemming from geopolitical tensions with China.
- 100,000 job losses: As a result of these challenges, the industry has also lost about 100,000 jobs during this period.
- Export opportunity loss: India missed an export opportunity worth $10 billion, and there’s an additional $2 billion in value addition losses.
Main Issues:
- Visa Delays for Chinese Citizens: The expansion of India’s electronics industry is being hampered by delays in issuing visas for Chinese officials. These officials are crucial for tech transfer, setting up manufacturing units, and ensuring operational efficiency. There are 4,000-5,000 pending visa applications from Chinese executives, causing significant delays in expansion plans.
- Investigations on Chinese Companies: Many Chinese companies operating in India are under investigation. Scrutiny over Chinese investments and businesses has intensified, further slowing the approval process for business and investment proposals. This prolonged uncertainty is affecting investment inflows and collaboration efforts.
- Lobbying for Faster Visa Approval: Industry groups like the India Cellular and Electronics Association (ICEA) and Manufacturers Association of Information Technology (MAIT) are pushing the central government to speed up the visa approval process. Currently, visa approvals are taking over a month, despite a system being in place to approve business visas within 10 days.
Economic Context:
The electronics industry heavily relies on Chinese expertise, tech transfer, and equipment, especially for large-scale manufacturing projects. While India has been working on reducing its dependence on China and promoting domestic production, these disruptions have exposed vulnerabilities in the supply chain. Moreover, the loss of jobs and missed export opportunities come at a time when India is pushing for more global competitiveness in manufacturing through initiatives like Make in India and the Production-Linked Incentive (PLI) scheme.
The strained relationship between India and China, which worsened after border clashes in 2020, continues to impact various industries, with electronics being one of the hardest-hit sectors.
