China tries to choke India's trade, Delhi fights back

Bengaluru: China is creating obstacles for India, from stopping rare earth minerals and magnets, to withdrawing their technological manpower . This is the enactment of a broader strategic shift by Beijing in its trade and economic policies concerning India, some experts have said, adding that China is trying to curb India's manufacturing ambitions and tighten control over critical exports.

Recently Bloomberg had reported that more than 300 Chinese engineers and technicians have been sent back from Foxconn's Indian plants in the past two months, just as Apple ramped up iPhone production in India. The move prompted some experts to raise questions over the sustainability of Apple's efforts to diversify its supply chain away from China.

However the claims were refuted by sources close to the companies, who reportedly said the move will have no impact on the production of the upcoming iPhone 17. Apple vendors in India, Foxconn and Tata Electronics, have also seen easing of capital goods sourcing from China , the sources added.

According to an analysis by S&P Global Market Intelligence , iPhone sales in the US were 75.9 million units in 2024, with exports in March from India at 3.1 million units.

Unfortunately, for India, the pressure isn't limited to the electronics or manufacturing sector alone. The Economic Times recently reported that China has halted exports of specialty fertilisers to India over the past two months, a critical disruption, given that India sources nearly 80% of these high-efficiency fertilisers from China.

These fertilisers are used extensively for enhancing crop yield and soil quality in the June–December cycle. Contrary to tall claims of an Atmanirbhar Bharat by the government, India's dependence on Chinese inputs is deeply embedded across sectors. In industries from automobiles, chemicals & pharmaceuticals, to telecom & hi-tech trains, India’s dependence on China’s raw materials, equipment and technologies has only been overwhelming.

The Chinese Ministry of Commerce and General Administration of Customs in early April had announced the decision to implement export controls in certain rare earth elements. Now exporters of seven rare earth minerals and magnets have to seek license to export these items which are crucial in auto, defence, semiconductors, aviation, defence and other critical sectors.

The licenses are issued once the Chinese authorities are satisfied that these dual use minerals will be used for the purposes it was declared for and not in other strategic areas.

India is also preparing to reduce its reliance on Chinese imports of rare earth magnets, following Beijing’s recent export restrictions. India is working with industry stakeholders to develop domestic capabilities and secure alternative supply chains, Commerce and Industry Minister Piyush Goyal has assured.

These magnets are critical components in electric vehicles, electronics, wind turbines and defence applications. It is a shift in the global perspective of doing business, Goyal has told stakeholders, asking them to be prepared for the shift.