China's Export Curbs a Wake-Up Call for India: GTRI Urges Urgent Reverse-Engineering Push

New Delhi, July 3: China’s escalating export restrictions on critical minerals, which are indispensable for India’s electronics and clean energy sectors, are now a critical concern demanding immediate and decisive policy action from India. This warning comes from a recent report by the Global Trade Research Initiative (GTRI) think tank.

GTRI has expressed alarm over China’s deliberate use of economic leverage to hinder India’s industrial progress. Over the past year, Beijing has systematically imposed export restrictions on crucial minerals and vital engineering support, often citing national security. These actions have intensified India’s reliance on China and amplified its strategic vulnerabilities.

Critical Export Curbs Disrupt India’s Supply Chains

Since mid-2023, China has implemented export curbs on gallium and germanium, minerals that are essential for the electronics, electric vehicle (EV), and defence industries. The situation further intensified in late 2024 with restrictions on graphite exports, directly impacting India’s aspirations in battery manufacturing and clean energy technologies.

The disruption reached a peak in June 2025 when Chinese battery major CATL reportedly instructed Foxconn to withdraw all Chinese engineers from its manufacturing facility near Chennai. GTRI highlighted that this decision severely disrupted coordination and slowed progress at a critical juncture for India’s developing electronics and EV ecosystem.

Trade Imbalance Deepens

India’s economic dependence on China continues to grow. In FY25, India witnessed a surge in imports from China while its own exports to China sharply declined. This has led to a staggering trade deficit of USD 100 billion with China.

Chinese firms currently hold significant dominance in India’s supply chains for essential products such as laptops, solar panels, lithium-ion batteries, antibiotics, and viscose yarn, fulfilling over 80 percent of domestic demand in these critical sectors.

GTRI’s Roadmap: Reverse-Engineering and Localisation

Ajay Srivastava, Founder of GTRI, underscored the urgent need for India to reduce its excessive reliance on Chinese imports. He proposed a multi-pronged strategy centered on reverse-engineering and domestic innovation.

“India must act to slash Chinese import dependence. There is an urgent need to do reverse-engineering of low- to mid-tech imports, domestic production incentives, and long-term investment in deep-tech manufacturing,” Srivastava said.

He advocated for a nationwide reverse-engineering initiative, suggesting the establishment of sector-specific industrial labs. These labs would be tasked with deconstructing commonly imported goods and developing open-access, standardised blueprints. These blueprints could then be disseminated to Indian MSMEs for niche production and to larger firms for mass manufacturing.

Additionally, Srivastava recommended creating a ‘Localize-100’ tracker to monitor the progress of localising the top 100 low- and mid-tech imports from China.

Building Economic Resilience

By strategically combining public sector R&D capabilities with private manufacturing capacities, India can progressively replace high-volume imports and build resilience into its industrial base. GTRI argues that such a strategic and phased approach is crucial for maintaining long-term economic sovereignty amidst evolving global trade dynamics.

As China increasingly uses its supply chain dominance as a strategic tool, the report emphasises that India must act swiftly and strategically to protect its economy and accelerate self-reliance across key sectors.

Future Outlook

China’s export curbs have exposed critical gaps in India’s industrial self-reliance, especially in sectors like electronics, EVs, solar energy, and pharmaceuticals. The disruption caused by the withdrawal of Chinese engineers from strategic projects highlights how deeply India’s emerging industries are entangled with Chinese expertise and raw materials. If left unaddressed, this dependency could seriously undermine India’s long-term economic and geopolitical leverage.

GTRI’s call for a structured reverse-engineering strategy marks a crucial turning point. By building sector-specific industrial labs, India can deconstruct commonly imported goods and develop indigenous alternatives tailored for mass manufacturing. The suggested ‘Localize-100’ tracker could add transparency and accountability to this localisation push, encouraging both public and private sector alignment.

Going forward, India must prioritise investment in R&D, incentivise domestic production of critical components, and tighten import substitution policies. Close coordination between government, academia, and industry will be essential to build resilient supply chains and reduce vulnerability to external shocks. With proactive policymaking and sustained effort, India can transform this crisis into an opportunity to become a global manufacturing hub for strategic technologies.

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