Rs 1.25 lakh crore loss for electronics sector due to India-China tensions – Trak.in

The ongoing tensions between India and China have had a significant impact on the Indian electronics manufacturing sector. According to a recent report by the Economic Times, these geopolitical frictions have resulted in significant financial losses and job losses, creating a challenging environment for the industry.

Financial losses and job cuts

India’s electronics manufacturing sector has suffered production losses of Rs 1.25 lakh crore ($15 billion) over the past four years. This economic failure has led to the loss of 100,000 jobs, deepening the challenges facing the sector. The situation is further complicated by delays in issuing visas to Chinese nationals and government investigations into Chinese companies operating in India.

Export and collateral losses

Apart from production losses, the industry reported lost export opportunities worth $10 billion (Rs 83,550 crore) and $2 billion in value additions. These losses underscore the significant economic impact of strained relations between the two countries.

The visa delays obstructive operations

Expansion plans for India’s electronics manufacturing sector have been hampered by a backlog of 4,000-5,000 visa applications from Chinese executives, according to industry executives. Despite a mechanism to process business visa applications within 10 days, approval currently takes over a month. This delay affects technology transfer, installation of production units, efficiency processes and maintenance operations.

Impact on national added value

The Indian Mobile and Electronics Association (ICEA) has raised concerns about the impact on the national value addition (DVA) plan. The production-linked incentive (PLI) scheme for mobile phones, launched in 2020-21, aimed to shift the supply chain from China to India. However, the continuing impasse and increased scrutiny of investments by countries bordering India have hampered this change.

Competitive disadvantages

Pankaj Mohindroo, chairman of ICEA, noted that India faces a new disadvantage compared to countries such as Vietnam, Malaysia and Mexico, which have free access to capital, technology and skills from China. The reluctance of Chinese nationals to come to India due to fear of arrest and interrogation is further exacerbating the problem.

Industry-wide concerns

Industry executives have warned that if Chinese companies decide to leave India, it will lead to significant product shortages, job losses and major production capacity outages. China’s lack of participation in India’s flagship mobile PLI program has already resulted in lost business opportunities worth $5-7 billion (£41,775-58,485 crore) since 2020.

Application

India’s electronics manufacturing sector is at a crossroads and faces significant challenges due to ongoing tensions between India and China. The industry is calling on the government to speed up visa approvals and find a balanced solution that takes into account both national security and economic growth. The future of India’s electronics manufacturing industry depends on addressing geopolitical challenges and creating a more enabling environment for growth and development.

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