India's Tech Ties: Deepening Integration with China's Electronics Supply Chains

India's increasing electronics imports from China signal deeper supply chain integration, not mere dependence on cheap goods. A recent study urges targeted localisation and domestic value addition to bolster critical sectors like electric mobility. Despite challenges, strategic cooperation could enhance India’s manufacturing capabilities.

A new study highlights how India’s growing electronics imports from China represent not just a dependence on cost-effective finished products, but a deeper integration of supply chains. The Koan Advisory Group, in cooperation with the Institute of Chinese Studies, asserts that targeted localisation and domestic value addition in crucial sectors are essential.

By 2025-26, China will account for over 80% of India’s imports across 71 tariff lines. Electrical machinery and electronic equipment, notably in HS Chapter 85, contribute significantly to India’s trade deficit with China, which stands at a staggering USD 112.1 billion. This includes semiconductor devices and lithium-ion batteries crucial to India’s industrial and strategic supply chains.

The report identifies structural deficiencies in India’s domestic manufacturing capacity as the key factor driving the persistent trade deficit under HS Chapter 85. Core components, such as motors and switching equipment, are indispensable across telecom, consumer electronics, and industrial machinery sectors. The study suggests India leverage established global supply chains to expand domestic manufacturing in electric mobility and energy storage while increasing local value creation.