Why electronics manufacturing in India has taken a hit
What's the story
India's electronics manufacturing sector is facing major challenges due to import restrictions on gold compounds, a key raw material. The Directorate General of Foreign Trade (DGFT) issued an order on June 17, reclassifying imports of colloidal precious metals and compounds from "free" to "restricted." This comes after China imposed restrictions on the export of rare earth magnets and specialized capital goods.
Industry impact
ICEA raises concerns over import restriction
The India Cellular and Electronics Association (ICEA) has raised concerns over the import restriction, saying it has affected the availability of this critical material. ICEA Chairman Pankaj Mohindroo said, "This has introduced uncertainty in light of ongoing efforts to scale up electronics manufacturing." He also warned that policy unpredictability might deter investment in critical sub-assembly segments where these inputs are essential.
Manufacturing challenges
Localization effort now complicated
Mohindroo also highlighted that the Electronics Component Manufacturing Scheme (ECMS) seeks to localize key components like printed circuit boards, camera modules, mechanical parts, and connectors. All these components need gold-based plating materials as part of their manufacturing process. The import restrictions on gold compounds have now complicated this localization effort for domestic electronics manufacturers.
Supply chain impact
ELCINA also raised concerns
The Electronics Components Industry Association (ELCINA) has also raised concerns over the import restrictions. It said customs authorities have begun holding consignments of Potassium Gold Cyanide (GPC) and similar materials, causing major delays to production lines and disrupting the supply chains in the electronics manufacturing sector. ELCINA Secretary General Rajoo Goel stressed these compounds are critical raw materials for manufacturing electronic components such as connectors, high-end PCBs, and semiconductors.
Business effect
Import restriction will hurt ease of doing business
ELCINA has warned that the import restriction will hurt the ease of doing business for electronic components manufacturers and threaten the success of government's flagship schemes such as ECMS, PLI, and SPECS. The association stressed such inputs are imported on an actual user basis and consumed fully within the manufacturing process. They do not enter bullion trade or precious metal markets, but are critical for captive consumption by electronics manufacturers.