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(You can now subscribe to our(You can now subscribe to our Economic Times WhatsApp channelChina’s new supply chain control regime is threatening to dent India’s ambition to become an alternate global electronics manufacturing hub, forcing the industry to reach out to the Centre for relief.Beijing imposed the curbs in April with the aim of controlling and defending its supply chains.
The new mechanism will trigger regulatory retaliation, operational restrictions, and even make senior executives of companies involved in shifting manufacturing out of China personally liable.
Due to the severity of the situation, the Indian electronics industry has approached the government seeking urgent assistance, said people aware of the matter.The industry is of the view that the measures by China will impact supply chain stability, investments and exports growth.
“The Chinese don’t want to cede space to India, and therefore, they have tightened controls, virtually stalling any efforts by global players to diversify,” said the executive.
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China’s new supply chain control regime is threatening to dent India’s ambition to become an alternate global electronics manufacturing hub, forcing the industry to reach out to the Centre for relief.Beijing imposed the curbs in April with the aim of controlling and defending its supply chains. The new mechanism will trigger regulatory retaliation, operational restrictions, and even make senior executives of companies involved in shifting manufacturing out of China personally liable. This is likely to impact top brands such as Apple, and its suppliers in India, besides domestic companies looking to for ge joint ventures with Chinese companies.Apple didn’t respond to queries. Due to the severity of the situation, the Indian electronics industry has approached the government seeking urgent assistance, said people aware of the matter.The industry is of the view that the measures by China will impact supply chain stability, investments and exports growth. “The government is aware of the developments and will see what best can be done after consultations with industry,” said a government official on condition of anonymity, adding the issue may involve inter-ministerial consultations.Executives told ETthat despite India building supply chains and reducing external dependencies, imports of components, assemblies and capital equipment from China remain critical to sustain manufacturing and exports.Beijing formalised the tighter controls by issuing two decrees — 834 and 835 — last month.“These decrees significantly expand the authority of Chinese regulators to scrutinise, intervene and act arbitrarily in supply chain decisions taken by firms, including global players, which have either shifted or are planning to move their supply chains to India,” said a senior executive at one of the top electronics manufacturers.Beijing has slapped curbs on information collection and supply chain diligence, bringing even routine compliance under the ambit of legislation. The decrees call for personal sanctions on corporate decision-makers, which means any individual who signs off on a decision to build a factory in India as part of a diversification strategy could face punitive measures.A second executive said the timing of China’s action is crucial, coming just weeks after India relaxed Press Note 3restrictions for global firms in a bid to accelerate manufacturing investments and as part of New Delhi’s aim to attract global companies under the China+1 strategy. “The Chinese don’t want to cede space to India, and therefore, they have tightened controls, virtually stalling any efforts by global players to diversify,” said the executive.
