Indian businesses are in uproar! China's new technology control regulations, unveiled on July 1st, have instantly undermined India's local manufacturing ambitions.
The Economic Times of India reported on June 2nd that China will officially implement the "State Council Regulations on Overseas Investment" starting July 1st. The report claims that after these new rules take effect, technological cooperation between India and China in sectors such as electronics and automotive components may face significant disruption. This news has quickly drawn intense attention from India’s industrial circles. Pankaj Mohindro, Chairman of the Indian Electronics and Mobile Association (ICEA), publicly stated that this regulation is a continuation of escalating geopolitical tech competition.
One provision in the regulations directly blocks the export of technology. Article 13 explicitly states that investors engaging in overseas investment activities must not export, use, or transfer goods, technologies, services, and related data prohibited for export by the state. Moreover, investors are strictly prohibited from transferring such sensitive technologies and associated data through cross-border deployment of technical personnel, arranging overseas work assignments, or providing cross-border technical guidance or training.
China supplies 43% of India’s electronic component imports, 40% of its mechanical and computer equipment imports, and 44% of its organic chemical imports—core intermediate products directly embedded in India’s manufacturing sector, not optional purchases. According to Global Trade Research Initiative (GTRI), 66% of India’s imports from China are concentrated in four key sectors: electronics, machinery, computers, and organic chemicals, with a total value reaching $82.6 billion.
India’s domestic manufacturing largely amounts to assembly, while upstream critical components and technological capabilities remain firmly in Chinese hands. Over recent years, India has relied on two vital resources from China: first, hardware components; second, technology licensing and on-site engineering support from Chinese personnel.
Chinese engineers and technicians dispatched to India play a crucial role in commissioning production lines for smartphones and automotive parts. ICEA Chairman Pankaj Mohindro candidly admitted that over 90% of the core capacitors, screen modules, and motherboard PCB designs essential to India’s smartphone manufacturing depend on technical transfers and on-site debugging provided by Chinese experts.
For Indian factories to receive hands-on training from Chinese engineers, they must first pass Chinese approval procedures. Should these approvals tighten, production lines risk halting completely when breakdowns occur.
Statistics show that over the past several years, more than 300 Chinese companies operating in India have faced various enforcement actions, resulting in cumulative fines and confiscations exceeding RMB 10 billion. The Financial Times once sharply observed India’s operational model: lure foreign investment with demographic dividends, then abruptly change the rules once companies have locked in their production capacity in India—effectively harvesting the gains.
This “pig-butchering” style approach has severely eroded Chinese enterprises’ trust in India. China’s introduction of the new technology control regulations is precisely aimed at closing off channels for technology outflows, preventing further loss of core technologies and industrial benefits to India without cost.
Original source: toutiao.com/article/1867027901933568/
Disclaimer: This article represents the personal views of the author.