The dragon is tightening its hold: Can India defy it?
Live Events
You Might Also Like:
Foxconn recalls Chinese staff from India, disrupting Apple's iPhone 17 plans
Can China hobble India's rise as a manufacturing power?
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
In recent months, geopolitical undercurrents have intensified between Asia's two largest economies, India and China. While the military standoff in Ladakh's Galwan Valley in 2020 marked a turning point in bilateral relations, a quieter but far more consequential confrontation is now unfolding. China is trying to undermine India's manufacturing ascent through strategic export denials, regulatory pressure and skilled labour restrictions. Several steps taken by China in the past few months indicate a well-formed strategy to hobble India's rise as a manufacturing power just when many factors align to help that.Given India's dependence on Chinese imports in several sectors, China can seriously hamper India's dream of becoming a rival manufacturing power. But in the long run, its obstructive measures will only help India gain self-reliance.China's economic strategy appears to be increasingly shaped by the need to maintain its dominance as the world's factory, especially as global manufacturers pursue the 'China Plus One' strategy to diversify supply chains. India, with its vast labour force, growing infrastructure and government-backed industrial policies, is emerging as a prime alternative. This transition poses a direct threat to China's central role in global manufacturing.Beijing's recent actions suggest it is deploying several tools to delay or derail India's industrial ambitions. Bloomberg reported on Wednesday that over 300 Chinese engineers employed by Foxconn in India have been recalled to China, reportedly due to regulatory pressure from Beijing. These engineers were supposed to be critical to the upskilling of Indian teams at Foxconn's iPhone assembly lines, a process essential to ramp up production of future models like the iPhone 17.Moreover, China has either halted or significantly delayed exports of key materials to India, including rare earth magnets (vital for manufacturing electric vehicles), specialty fertilisers (essential for Indian agriculture), and even tunnel boring machines (critical for infrastructure projects like metros and smart cities). These are not isolated trade hiccups but part of a broader strategy to weaponize trade and technology transfers. Beijing is keen to prevent a large-scale migration of Chinese technology and manufacturing expertise to India. By restricting technology and skilled labour exports, China aims to create bottlenecks in India's supply chain just as it begins gaining global traction.There could be two key motivations behind China's behaviour. India's post-Galwan measures, such as tightened scrutiny of Chinese FDI, banning hundreds of Chinese apps and blocking Huawei and ZTE from 5G trials in 2021, have significantly curtailed China's economic leverage in India. Denied access to one of the world's largest markets, Beijing may be retaliating economically to assert its relevance and influence. Secondly, China wants to strengthen a pre-emptive control of supply chains. As India's PLI schemes begin to yield tangible results -- Apple boosting iPhone production, semiconductor plans taking off and India becoming a major mobile phone exporter -- China wants to prevent a global narrative shift from 'Make in China' to 'Make in India".India's dependence on China for several intermediate goods, especially in electronics, EVs, chemicals and rare earth elements, is substantial. China controls more than 85% of global rare earth processing, and a large portion of Indian imports for electronics manufacturing still originate from China. In the short term, China's restrictions can cause delays, cost overruns and capacity gaps.However, the long-term picture is more nuanced. The exit of Chinese engineers from Foxconn's Indian operations is deemed to have a "negligible" impact, as per Apple analyst Ming-Chi Kuo. He noted that there were not many Chinese employees at the company's India iPhone facilities. Production capabilities at Foxconn's India iPhone facilities were established by the company's Taiwanese employees, like those from FIH's Minsheng plant, not Chinese employees, he said. Even amid US tariff threat over iPhones, Foxconn has not slowed down its ongoing mega expansion in India. This indicates that while Chinese know-how may have played a critical role in the initial ramp-up, Indian talent and local engineering capabilities are set to mature rapidly.Moreover, global firms are increasingly bullish on India. Apple's contract manufacturers, including Foxconn, Pegatron and Wistron (now owned by Tata), continue to expand their Indian footprints. With supply chain diversification being a geopolitical imperative for Western companies, India remains a central part of this new global manufacturing map.India has recognized the vulnerabilities arising from over-reliance on China and has responded with a mix of policy, investment and diplomatic initiatives. India is offering financial incentives across 14 sectors -- including semiconductors, electronics, EVs and pharmaceuticals -- to attract investment and scale up manufacturing. The PLI scheme has already contributed to India becoming the second-largest mobile phone producer in the world.Recently, in a direct response to China's rare earth squeeze, India is preparing a Rs 3,500–5,000 crore PLI scheme to boost the local manufacturing of rare earth magnets. Under this scheme, Sona Comstar, a major importer of these magnets, has announced plans to produce them domestically, signaling industry alignment with national goals. India is actively exploring alternate sources for specialty fertilisers and critical minerals, including deals with countries like Australia, Vietnam, and African nations. This aims to insulate agriculture and green energy sectors from Chinese pressure. India is investing heavily in upskilling its labour force and creating engineering talent pipelines to reduce dependency on Chinese technicians.Government-backed programmes and partnerships with industry are part of this push. India is negotiating trade agreements with the US and EU while it has already signed an FTA with the UK. These deals will open up new export markets and attract investment, helping India position itself as a global manufacturing hub outside China's shadow.India's manufacturing ecosystem is still young, but it is evolving rapidly, powered by a combination of global realignment, domestic ambition and geopolitical support from the West. China's export denials and covert trade obstructionism are signs of concern but they also reflect a realization that India is no longer just a large market -- it is a serious manufacturing contender .Ultimately, China's restrictions may serve as an accelerator rather than an obstacle. They are pushing India to build domestic capabilities, diversify partnerships, and focus on resilience. If India continues on its current trajectory - with strategic clarity, global cooperation, and internal reforms - it has the potential not just to withstand China's pressure, but to emerge stronger from it.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
30 minutes ago
- Time of India
Model community: Why Tibetans in India deserve more help
A long time ago, in the 1950s, China took control of Tibet. The Dalai Lama, the spiritual leader of Tibet, and thousands of Tibetans had to leave their homeland. They chose India as their new home, and since then, they've lived peacefully among us. India recently showed strong support for the Dalai Lama by saying that he alone should decide who the next Tibetan leader will be, not China. This is important because China wants to control even this decision. Tibetans in India: Peaceful and Proud Today, Tibetans live in 39 official settlements and many other places across India. They've shared their delicious food, traditional medicine, beautiful culture, and peaceful spirituality with us. Many of us know about prayer flags, momos, and the calming teachings of the Dalai Lama – all thanks to them! They have stayed peaceful, thankful, and respectful – all values that the Dalai Lama himself promotes. Meanwhile, in China, Tibetan culture is being changed, and Tibetan religion is tightly controlled by the government. But They Still Struggle Even though Tibetans have lived in India for over 70 years, they still face problems: They can't easily travel abroad . They can't own land or houses . Most of them can't get loans from banks . College and healthcare access is limited for many Tibetan youth. What Should Be Done? India has always welcomed refugees, like during the 1971 Bangladesh war, when we gave shelter to millions. So, helping Tibetans more shouldn't be hard. They've been model citizens – calm, helpful, and respectful. It's time to give them better support, like easing rules and helping them live more fully as part of Indian society. After all, they've added so much to our country — and they deserve our care and kindness in return. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
Mint
30 minutes ago
- Mint
India makes a push for cheaper foreign loans in yen, rupee
India is pressing multilateral development banks (MDBs) to lend more in Japanese yen and Indian rupees in an attempt to reduce borrowing costs and manage exchange rate risks more effectively, two officials aware of the matter said. New Delhi has steadily expanded loans and official development assistance (ODA) in yen to gain from ultra-low interest rates and the rupee's appreciation against the Japanese currency. Many of these loans finance infrastructure and development projects. 'Yen rates remain close to zero, and with the rupee having appreciated significantly against the yen since early 2023, yen borrowings, including through Samurai bonds, have emerged as a compelling option," one of the two officials cited above said, requesting anonymity. Samurai bonds are yen-denominated bonds issued in Japan by foreign entities to raise money. The development assumes significance since MDBs such as the World Bank, Asian Development Bank (ADB) and the International Monetary Fund (IMF) play a central role in global finance, especially in developing economies. These institutions lend in dollar as well as other reserve currencies. ADB, which mainly lends in dollars, has also issued rupee bonds. The Asian Infrastructure Investment Bank (AIIB) too lends in yen, euro and rupees. The yen is part of IMF's special drawing rights (SDR) basket of currencies, and can be used depending on borrower preference and availability. India is pushing for loans in yen, the second official confirmed, adding "These loans and ODAs are not free, and we pay interest on them. A lot has changed now with India's rise at the global high table, and we are in a better position to negotiate our terms and conditions with the MDBs," said the second person. 'Also, given our past record, India also happens to be very attractive for these lending institutions as well, given our repayment history and the credit profile. We will follow the strategy which is in our best interest," the person added. An ADB spokesperson said the bank has received a handful of requests from India for yen-denominated loans in the last two years, with three such agreements signed in 2023 and 2024. These include the Delhi-Meerut RRTS Tranche 3 (2023), the Nagpur Metro Urban Mobility Project (2024) and the Amaravati Capital City Development Programme (2024). The ADB spokesperson pointed out that despite the rising interest in yen loans, 20 out of 22 sovereign loans signed by ADB in India in 2024 were in dollars. 'ADB's advice to borrowers is to choose the most financially advantageous termsbased on needs and risk exposure of the project and the borrower's overall external debt portfolio," the spokesperson added. Queries emailed to the spokespersons of India's finance ministry, World Bank, AIIB, IMF and Exim Bank remained unanswered. 'India is expected to expand its yen exposure further as part of a calibrated shift to longer-tenure, lower-cost financing to mitigate exchange rate risks. It will also explore greater use of the domestic currency. However, the dollar will remain dominant in the medium term, given its role as the principal global reserve currency," the official cited earlier said. According to the Reserve Bank of India (RBI) data, yen-denominated liabilities rose to 6.2% of India's total external debt at the end of March 2025, up from 5.8% a year earlier. In absolute terms, this equals $45.6 billion out of the total $736.3 billion in external debt at the end of FY25. India's total external debt rose 10% in FY25. The US dollar still dominated India's external borrowings, accounting for 54.2%, followed by the Indian rupee (31.1%), yen (6.2%), SDR (4.6%), and the euro (3.2%). While the appeal of yen financing is clear, economists caution that since India lacks a deep forex market for the yen, most conversions still happen through cross-rates with the dollar or euro rather than direct market-determined rates, adding layers of complexity. 'Rupee-denominated loans are preferable from a stability standpoint. As for yen borrowings, unless a more efficient and transparent yen market develops, the advantages remain limited. In many cases, dollar- or SDR-denominated loans might still be more practical," said Bhanumurthy N.R., director of the Madras School of Economics. India's yen borrowing strategy is gaining traction across both bilateral and multilateral channels. In FY24 alone, India signed yen loan agreements with the Japan International Cooperation Agency (JICA) worth over ¥276 billion (around ₹15,600 crore), funding metro rail, logistics, and renewable energy projects. In FY25, JICA followed up with six ODA agreements worth ¥191.7 billion ( ₹11,181 crore) to support urban transport, water infrastructure, environmental protection, and livelihood programmes, including Delhi Metro Phase IV, Chennai's desalination plant, biodiversity projects in Punjab, and an aquaculture initiative in Assam. A separate ¥84.3 billion loan for Mumbai Metro Line 3 took the year's total to ¥276 billion ( ₹15,655 crore). 'India's push to secure more yen- and rupee-denominated loans from MDBs reflects a prudent effort to lower external borrowing costs while reducing exposure to the volatility of major foreign currencies like the US dollar," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap Llp, a financial advisory firm. 'From a bond market and risk perspective, rupee-denominated MDB funding is a strong fit. It eliminates currency mismatch, enhances debt predictability, and aligns well with India's broader strategy of deepening its local currency bond ecosystem. Yen-denominated loans, though historically low-cost, now come with added complexity due to heightened forex volatility and an uncertain interest rate trajectory in Japan," he added.
Time of India
an hour ago
- Time of India
Kolhapuri chappal gets leg-up over ‘copying' by Italian brand
Mumbai: A public interest litigation filed in Bombay high court seeks reliefs against Italian luxury fashion label Prada after it showcased open-toe leather sandals at the recent Milan Fashion Week that are "deceptively similar" to the Kolhapuri chappal. "The Kolhapuri chappal is the cultural symbol of Maharashtra and has special public sentiments attached to it. The act of copying and misrepresenting this craft in international markets effectively amounts to depriving local artisans of rightful recognition and credit for their work, who have preserved and practised this traditional art form for nearly 800 years," states the PIL filed by six advocates led by Ganesh Hingmire, an intellectual property rights expert. According to their petition, Kolhapuri chappal is protected with a geographical indication (GI). On June 22, Prada held its Spring/Summer 2026 Men's collection unveiling toe ring sandals "reportedly priced at over Rs 1 lakh per pair". There was no mention that it was Indian-inspired design. "The infringement of the design of the Kolhapuri chappal by a luxurious fashion label is without the knowledge or consent of the GI application holder or the authorised users," it adds. You Can Also Check: Mumbai AQI | Weather in Mumbai | Bank Holidays in Mumbai | Public Holidays in Mumbai While Prada "privately accepted" its collection is "inspired by Indian artisans", this acknowledgement surfaced after widespread backlash on social media. This acknowledgement was not given to the "makers of Kolhapuri chappals, GI Registry, the govt or public at large". Prada has not issued a formal apology, and the statement appears to be a "merely superficial attempt to deflect criticism". The petition said misuse causes "dilution of the GI identity, erodes its distinctiveness and unjustly enriches the foreign brand, depriving the artisans of the right economic and reputational benefits". The PIL says: "The handicraft is the result of countless hours of meticulous labour by artisans." Thus, Prada's "unauthorised profit-oriented motive displaying sandals deceptively close to Kolhapuri chappal and inscribing the word 'PRADA' on the footwear directly undermines the livelihood and dignity of the traditional artisans and authorised users of GI". The petitioners lament that the artisan community is not financially equipped to initiate civil proceedings, does not receive adequate support from govt bodies, and lacks awareness of their community rights, leaving them vulnerable. They want "strong, decisive measures to address these violations and set an exemplary legal precedent that deters future acts of cultural misappropriation". They have prayed for restraint and a permanent injunction on Prada from "commercialising the use of so-called toe ring sandals, which is originally a GI-tagged product, Kolhapuri chappal", to direct Prada to issue a widely circulated public apology and pay compensation to artisans for "reputational and economic damages." The PIL will be heard in due course.
