Is China dominating India’s electronic component imports? India imported over $18 billion from the region despite the growing electronics manufacturing sector. Domestic component production lags are prompting government incentive schemes.
Although India is witnessing the expansion of its electronics manufacturing sector, a heavy reliance on China and Hong Kong shows that the country has not yet significantly reduced its dependence on these critical suppliers, according to a report by the Indian Express. The report cited that in the financial year 2023-24, India imported over $12 billion worth of electronic components from China and $6 billion from Hong Kong, accounting for more than half of the country’s total electronic components imports.
According to the Ministry of Commerce, India’s total imports of electronic components reached $34.4 billion in that period, making it the fifth largest import category after crude oil, gold, petroleum products, and coal.
India’s role as a significant smartphone assembly hub has grown, with nearly all phones sold locally now assembled locally. For instance, India exported about $15 billion in smartphones in 2023-24, with iPhones accounting for $10 billion of that total.
However, this growth has increased India’s reliance on imported electronic components due to a lack of domestic manufacturing capabilities for key parts such as printed circuit boards, integrated circuits, and advanced displays.
Over the past five years, imports from China and Hong Kong have consistently surpassed those from other major electronic components producers like South Korea, Japan, Taiwan, and ASEAN countries, with whom India shares free trade agreements. Experts have suggested considering Hong Kong imports as Chinese due to the significant presence of mainland firms of China.
In 2019-20, imports from China and Hong Kong totalled over $10 billion, representing 62% of all electronic component imports. Although this figure slightly fell to $9.5 billion in 2020-21, their share remained at 62%. By 2021-22, imports from these regions surged to $17.7 billion, comprising over 68% of the total. Their share slightly decreased to 49.7% in 2022-23 but remained the predominant supplier.
A senior government official noted that India’s challenge in reducing dependency on Chinese suppliers stems from China’s well-established manufacturing base, built over the past few decades.
Even as Apple expands its operations in India, its contractors in mainland China increased to 157 in 2023, compared to 151 the previous year, while Indian suppliers remained at 14.
To address this, the Indian government is reportedly developing an incentive scheme for electronic components with a projected budget of Rs 300 billion to Rs 400 billion. Despite the rise in local smartphone production and exports, local value addition remains low at around 15%, compared to the desired 35-40%.
Although political tensions between India and China persist, including restrictions on Chinese social media companies and heightened scrutiny of investments, India is gradually opening up to more Chinese investments through joint ventures with domestic firms.
The Economic Survey 2023-24 suggested that while India should work to reduce its reliance on Chinese imports, it should also continue to welcome Chinese investments.
