China’s newly imposed supply chain control regime has emerged as a significant challenge to India’s ambition of positioning itself as an alternate global electronics manufacturing hub, reported TOI.

The measures, introduced in April, are designed to tighten Beijing’s grip on supply chains and defend its strategic interests. Industry leaders in India have already reached out to the Centre, seeking urgent relief and intervention to mitigate the fallout.

The new mechanism is expected to trigger regulatory retaliation and operational restrictions, while also introducing personal liability for senior executives of companies attempting to shift manufacturing out of China.

This development is particularly concerning for global brands such as Apple and its suppliers in India, as well as domestic firms exploring joint ventures with Chinese companies. Apple has not responded to queries on the matter, but industry insiders stress the severity of the situation.

Executives believe that the curbs will undermine supply chain stability, dampen investment flows, and slow down export growth. A government official, speaking on condition of anonymity, confirmed that the issue is being taken seriously and may require inter-ministerial consultations to determine the best course of action.

Despite India’s progress in building local supply chains and reducing external dependencies, imports of components, assemblies, and capital equipment from China remain critical to sustaining manufacturing and exports.

Beijing formalised its tighter controls through two decrees, numbered 834 and 835, which significantly expand the authority of Chinese regulators. These decrees empower officials to scrutinise, intervene, and act arbitrarily in supply chain decisions made by global firms, including those shifting operations to India.

The measures also extend to routine compliance processes, bringing information collection and supply chain diligence under legislative control. Most strikingly, the decrees introduce personal sanctions on corporate decision-makers, meaning any executive who approves a diversification move to India could face punitive consequences.

Industry executives highlight the timing of China’s actions as particularly strategic. The curbs were announced just weeks after India relaxed Press Note 3 restrictions to encourage global firms to accelerate manufacturing investments under the China+1 strategy. According to one senior executive, China’s intent is clear: it does not want to cede ground to India and has therefore tightened controls to stall diversification efforts by global players.

The broader context underscores the geopolitical and economic rivalry between the two Asian giants. India has been actively promoting itself as a resilient alternative in global supply chains, especially in electronics, semiconductors, and advanced manufacturing.

Initiatives such as the Production Linked Incentive (PLI) scheme and targeted policy relaxations have attracted major investments from companies like Foxconn, Tata Electronics, and others. However, China’s decrees now threaten to slow this momentum, creating uncertainty for firms weighing relocation or expansion in India.

Global observers note that these developments could reshape supply chain strategies worldwide. Multinational corporations may need to reassess their diversification plans, balancing the risks of punitive action from China against the opportunities offered by India’s growing ecosystem.

For India, the challenge lies in providing swift policy support, ensuring alternative sourcing channels, and reinforcing its attractiveness as a manufacturing hub despite external pressures.

TOI