A copy of the letter has been reviewed by Business Standard.
The issue concerns two decrees — the Regulations on the Security of Industrial and Supply Chains which took into effect on April 7 and the Regulations on Countering Foreign Improper Extra Territorial Jurisdiction, passed on April 13.
Indian manufacturers worry that these two regulations could negatively impact their ‘China Plus One’ strategy, part of a global pivot to diversify supply chains following the Covid-19 pandemic.
The ICEA letter said the decrees significantly expand state authority over companies’ supply chain decisions, including imposing restrictions on data collection, penalising firms shifting operations, and introducing personal liability on corporate executives. “These measures formalise ongoing non-transparent constraints and create uncertainty for companies pursuing ‘China Plus One’ strategy,” it said.
The communication suggested that the ministerial group assess the implications of the new rules across sectors, “plan appropriate policy interventions”, go for “structured engagement with global value chains to understand emerging constraints in shifting supply chains out of China and decide the best course of action”.
The letter has been copied to the revenue secretary in the ministry of finance, secretary of the Ministry of Electronics and Information Technology, the foreign secretary, secretary DIPP and the chief economic advisor among others.
The association said it is concerned that “at this critical juncture for India’s manufacturing and export momentum, these developments pose a risk to investment flows, supply chain stability, and manufacturing scale-up, underscoring the need for timely and coordinated government response”. The rules put tough restrictions on supply chain diversification — for instance, an executive in a Chinese company who clears an Indian factory as part of the ‘China Plus One’ strategy could personally be sanctioned.
Electronic are the third-largest goods exported by India. In FY26 the overall value of electronics in the country is expected to hit $150 billion, with exports touching $28 billion. The target of the government is equally ambitious — to hit electronics production at $500 billion by 2030 out of which $200 billion will be exports. The bulk of electronics exports comes from mobile phones which accounted for $70 billion in production value and $29.4 billion in exports in FY 26. The bulk of the exports comprise Apple Inc which exported over $ 21 billion of iPhones from India in FY26 but is dependent on China for components.
