Geopolitical Dynamics and Manufacturing in India
China's actions to restrict its citizens working at Foxconn facilities in India and curb the export of specialized manufacturing equipment highlight increasing geopolitical tensions. This move aims to limit India’s manufacturing growth, which poses a potential challenge to China’s economic dominance.
Impact on India’s Manufacturing Ambitions
- Strategic Hindrance: China's restrictions threaten India's goal to become a global manufacturing power, particularly in electronics.
- Knowledge Transfer: By limiting Chinese technicians in India, China aims to prevent the transfer of specialized knowledge to Indian workers.
- Supply Chain Weaponization: Disruptions in specialized equipment availability hinder production and strategic negotiations.
Global Trade Dynamics
- Amidst growing trade tensions with the West, global companies are adopting a China Plus One strategy, diversifying beyond China.
- India is positioning itself as a key beneficiary of this shift, alongside Vietnam and Mexico.
India's Strategic Efforts
- Apple-Foxconn Collaboration: Intensive efforts have led to significant investments in South India, including the production of iPhone models.
- Production-Linked Incentive (PLI) Scheme: Enhanced budget allocations aim to boost electronics manufacturing.
- Custom Duties Reduction: Removal of import taxes on mobile phone components facilitates manufacturing growth.
Future Directions for India
- To mitigate short-term challenges, India must engage Apple and Foxconn in negotiations with China.
- A holistic manufacturing ecosystem requires scaling up ancillary industries and incentivizing private capital investment in indigenous manufacturing.
- The National Manufacturing Mission focuses on developing technological clusters and skill development programs to enhance the manufacturing landscape.
Conclusion: While China’s actions pose immediate challenges, they also underscore the necessity for India to strengthen its manufacturing infrastructure and strategic alliances.
Authored by Anand P. Krishnan, a Fellow at the Centre of Excellence for Himalayan Studies, Shiv Nadar Institution of Eminence, Delhi NCR.
