Industry body ICEA has urged the government to establish a high-level inter-ministerial group to assess the impact of recent Chinese regulations on India's supply chain diversification strategy. According to reports from Business Standard, the association sent a letter to multiple government departments including the revenue secretary, electronics secretary, foreign secretary, and chief economic advisor, among others. The letter has been copied to the revenue secretary in the ministry of finance, secretary of the Ministry of Electronics and Information Technology, the foreign secretary, secretary DIPP and the chief economic advisor. A government official, speaking on the condition of anonymity, confirmed awareness of the situation and indicated that inter-ministerial consultations may be required to determine an appropriate response.
The issue centers around two Chinese decrees that took effect in April 2026. The Regulations on the Security of Industrial and Supply Chains came into effect on April 7, while the Regulations on Countering Foreign Improper Extra Territorial Jurisdiction were passed on April 13. As reported by Business Standard, Indian manufacturers worry these regulations could negatively impact their 'China Plus One' strategy, which is part of a global pivot to diversify supply chains following the Covid-19 pandemic. The decrees significantly expand state authority over companies' supply chain decisions, including imposing restrictions on data collection, penalising firms shifting operations, and introducing personal liability on corporate executives. A second industry executive told Economic Times that the intent behind Beijing's actions is unmistakable: to prevent global players from diversifying away from China and into competing manufacturing hubs like India, stating "The Chinese don't want to cede space to India, and therefore, they have tightened controls, virtually stalling any efforts by global players to diversify."
The ICEA letter suggested that the ministerial group should assess the implications of the new rules across sectors and plan appropriate policy interventions. According to Business Standard, the association emphasized that at this critical juncture for India's manufacturing and export momentum, these developments pose risks to investment flows, supply chain stability, and manufacturing scale-up. The rules put tough restrictions on supply chain diversification, with executives in Chinese companies who clear Indian factories as part of the 'China Plus One' strategy facing potential personal sanctions. A senior executive at one of India's top electronics manufacturers explained that the two decrees significantly expand the authority of Chinese regulators to scrutinise and intervene in supply chain decisions, even those made by global companies that have already shifted or are in the process of moving operations to India. The framework also introduces personal sanctions targeting corporate decision-makers, meaning executives who approve manufacturing diversification plans, including setting up facilities in India, could face punitive action under the new rules.
Electronics represent the third-largest goods exported by India, with the overall value expected to reach $150 billion in FY26. As reported by Business Standard, exports are projected to touch $28 billion in FY26. The government has set an ambitious target of achieving $500 billion in electronics production by 2030, with $200 billion targeted for exports. The bulk of electronics exports comes from mobile phones, which accounted for $70 billion in production value and $29.4 billion in exports in FY26. Apple Inc exported over $21 billion of iPhones from India in FY26, but remains dependent on China for components. Despite sustained efforts to develop domestic supply chains and reduce dependence on imports, India's electronics sector still relies heavily on Chinese components, assemblies, and capital equipment to maintain production and meet export commitments.
