India’s burgeoning electronics manufacturing sector is confronting significant headwinds due to recent import restrictions on gold compounds, essential raw materials used in advanced electronic components. This regulatory shift compounds challenges already posed by China’s stringent controls on rare earth magnet exports, which are vital for producing semiconductors, electric vehicles, and other high-tech devices. Industry bodies warn that these measures could stall the government's ambitions to scale domestic electronics production under flagship schemes like Make in India and the Electronics Component Manufacturing Scheme (ECMS). With supply chain disruptions mounting, manufacturers face operational delays, investment uncertainties, and potential job losses in critical clusters across India.
Critical Raw Material Shortages Threaten Electronics Manufacturing Growth
India’s electronics manufacturing sector, poised for rapid expansion under government initiatives, now grapples with fresh obstacles that threaten its growth trajectory. The Directorate General of Foreign Trade (DGFT) recently reclassified imports of colloidal precious metals and compounds—including gold-based plating materials—from a “free” to a “restricted” category as of June 17, 2025. This shift has disrupted the supply of gold compounds widely used to enhance conductivity in semiconductor components, printed circuit boards (PCBs), and connectors.
This development exacerbates existing supply challenges arising from China’s clampdown on rare earth magnet exports and specialized capital goods, essential for manufacturing cutting-edge electronics. Rare earth magnets are indispensable in electric vehicles, wind turbines, medical equipment, and consumer electronics, making these constraints particularly damaging.
Industry Response: Uncertainty and Operational Disruptions
The India Cellular and Electronics Association (ICEA) and Electronic Industries Association of India (Elcina), representing key stakeholders, have expressed deep concerns to the Ministry of Electronics and Information Technology. ICEA Chairman Pankaj Mohindroo highlighted that the import curbs have created uncertainty in scaling up domestic manufacturing and could dampen investor confidence in critical sub-assembly segments reliant on these materials.
Elcina Secretary General Rajoo Goel detailed the operational impact, noting customs authorities have started holding shipments of Potassium Gold Cyanide (PGC) and similar compounds, causing delays in production lines. These raw materials, procured on a strictly “actual user” basis, are consumed entirely within manufacturing processes and do not enter precious metal markets. Their restricted availability threatens to disrupt supply chains vital for producing high-end PCBs, connectors, and semiconductors.
Impact on Make in India and Job Market
The imposed restrictions come at a time when India’s flagship initiatives—such as the ECMS, Production Linked Incentive (PLI), and SPECS schemes—aim to localize production and reduce dependency on imports. The scarcity of gold compounds and rare earth elements directly undermines these ambitions.
Elcina estimates that over 21,000 jobs in the audio electronics sector in Noida and southern India are at risk due to the cascading effects of China’s export limitations and India’s own import curbs. Electronic manufacturing service (EMS) providers also face hurdles in procuring capital equipment from China, delaying project timelines and capacity expansions.
Broader Geopolitical and Economic Context
In April 2024, China tightened export licensing on rare earth elements such as terbium and dysprosium, vital for producing high-performance Neodymium-Iron-Boron (NdFeB) magnets used extensively in consumer electronics. This export control has exacerbated the global supply chain bottlenecks for electronics manufacturers worldwide.
A notable fallout was seen recently when Foxconn, the contract manufacturer for Apple’s iPhones, repatriated hundreds of Chinese technology professionals assisting its India operations. This move slowed capacity building and workforce training, highlighting the operational risks posed by geopolitical tensions and regulatory shifts.
Conclusion: Navigating Uncertainty to Secure Electronics Manufacturing Ambitions
India’s electronics manufacturing ecosystem now faces a pivotal challenge in balancing regulatory control with the imperatives of industrial growth and supply chain resilience. While securing critical raw materials is vital, the recent import restrictions have inadvertently injected volatility and delays at a crucial juncture for the sector.
For India to realize its vision of becoming a global electronics manufacturing hub, policymakers must carefully calibrate trade regulations to facilitate uninterrupted access to essential inputs. Coordinated efforts between government and industry are imperative to restore supply chain confidence, protect jobs, and attract investment—ensuring that domestic manufacturing ambitions do not falter amid geopolitical headwinds.
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