This article is part of the UPSC Daily Editorial Analysis, covering The Hindu editorial – "Dealing with China’s Weaponisation of E-Supply Chains," published on 15th February, by the best UPSC coaching in Kolkata.

Syllabus: UPSC General Studies (GS) Paper 2: International Relations and GS Paper 3 (Indian Economy & Manufacturing Sector)

Context:

In mid-January, China blocked its engineers and technicians at Foxconn’s facilities in India from traveling. It further ordered engineers already in India to return. China stopped the supply of critical machinery too, which is essential for manufacturing. Note: China has a monopoly in these equipments. Apple-Foxconn’s facilities are key to India’s manufacturing goals. These restrictions would slow down production and could hinder India’s goal of becoming a global electronics hub.

Foxconn Foxconn is a Taiwanese company that manufactures electronic devices for many global companies. They are best known for making iPhones, iPads and other consumer electronics. While headquartered in Taiwan, the company earns the majority of its revenue from assets in China and is one of the largest employers worldwide.

What Are the Geopolitical and Economic Motivations Behind China’s Move?

Stopping knowledge transfer: China wants to prevent Indian workers from gaining technical expertise.

Slowing down production: China’s restrictions on equipment and workers are delaying manufacturing in India.

Maintaining dominance: China wants to keep control over the global electronics supply chain by limiting India’s progress.

Why Are Global Companies Shifting from China to India?

Adopting the ‘China Plus One’ strategy: Many global companies are reducing their dependence on China by shifting production elsewhere.

Reducing risks: Businesses want to avoid trade tensions and geopolitical issues linked to China.

Exploring alternatives: Countries like India, Vietnam and Mexico are becoming popular manufacturing destinations.

How is Apple expanding in India through Foxconn’s growing production and investment?

Expanding Apple’s presence: Foxconn started assembling iPhone 15 models in Tamil Nadu.

Increasing production: Apple produced $14 billion worth of iPhones in India by March 2024.

Boosting investment: State governments in South India have prioritized Apple-Foxconn to attract foreign investment.

Recognizing Foxconn’s role: The Padma Bhushan award to Young Liu in 2024 highlights Foxconn’s importance to India’s economy.

How Can India Address Trade Restrictions Imposed by China?

Apple and Foxconn must engage with Chinese authorities to ease trade restrictions. A diplomatic approach can help resolve supply chain disruptions and ensure smooth production in India. Strengthening bilateral trade relations may also prevent future restrictions on critical components and workforce movement.

What Are the Challenges of Import Dependence on China?

Relying on advanced machinery: India still imports critical high-tech equipment from China.

Importing key components: India depends on China for semiconductor, circuit boards and sensors.

How Is the Indian Government Strengthening ‘Make in India’?

Increasing Production Linked Incentive (PLI) incentives: The government raised incentives for electronics manufacturing to ₹8,885 crore ($1.02 billion).

Providing financial support: Apple’s suppliers in India received ₹6,600 crore from the PLI scheme.

Reducing import taxes: The 2025 Budget removed duties on mobile components like PCBs, sensors and camera modules.

What Should Be India’s Long-Term Strategy for Self-Reliance?
Investing in worker training: India needs to develop a highly skilled workforce for electronics manufacturing.
Building a stronger supply chain: India must produce critical components locally to reduce dependence on imports.
Encouraging private investment: Indian companies should invest in manufacturing capabilities to strengthen domestic production.

How Can India Strengthen Its Domestic Manufacturing Ecosystem?

Scaling up industries: India must expand beyond final assembly and start producing key components.

Creating industry clusters: Companies should collaborate to enhance knowledge-sharing and efficiency.

Providing on-site training: Workers must receive hands-on experience in high-tech production to improve expertise.

Conclusion: How Can India Overcome These Challenges?

Reducing reliance on China: India must develop its own supply chain to become truly independent.

Speeding up investments: The government should allocate more funds for technology and worker training.

Ensuring long-term success: India must support local industries to become a global electronics manufacturing leader.

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PRACTICE QUESTION How do China’s trade restrictions impact India’s manufacturing goals? Suggest strategies for self-reliance in electronics production.

1. Why did China impose trade restrictions affecting India’s electronics manufacturing?

China aims to slow India’s production, prevent knowledge transfer and maintain dominance in the global electronics supply chain.

2. How do China’s restrictions impact India’s goal of becoming a global electronics hub?

The shortage of critical machinery and skilled workers delays manufacturing, affecting India’s Make in India and self-reliance efforts.

3. Why are global companies shifting from China to India?

The China Plus One strategy helps companies diversify risks, avoid trade tensions and explore alternative manufacturing hubs like India and Vietnam.

4. What steps is India taking to boost domestic electronics manufacturing?

India is increasing PLI incentives, reducing import duties on components and encouraging investment in local supply chains.

5. How can India reduce dependence on China for electronic components?

India must invest in worker training, develop local industries and scale up semiconductor and advanced machinery production.