Many companies in the electronics industry, who build India’s power supply systems, are cancelling orders of raw materials coming from China, the Economic Times reported. R.K. Chugh, the president of the Indian Electrical and Electronics Manufacturers’ Association told the publication that the industry “can shift to reliable and friendlier countries like Japan, Taiwan, Korea, Germany, etc.” The move follows tensions between India and China following the border clashes between the countries in June.
Earlier this month, the Ministry of Power reportedly imposed mandatory cybersecurity audits on imports for the power sector. The Times of India reported that since 2016, Chinese power infrastructure companies have got contracts to install “intelligent control systems” in 46 cities’ electricity networks.
The cost of switching from Chinese imports
The transition away from imports won’t come cheap for the industry — supplies of raw material and other imports from China beat out domestic competition on price. IEEMA director general Sunil Misra acknowledged as much in an editorial for the association’s journal. “There is a high import from China and [there are] two reasons for this,” he said. “Firstly, [the] Chinese offering very low prices and exploiting the public procurement system which is based on L1, in the process giving low quality material. Secondly Indian businesses finding these low prices [as] easy options.” Misra added that state support helped the pricing stay competitive, and that there are more than just economic reasons for it.
“The People’s Republic of China today sits atop a huge pile of capital and is definitely a financial, economic and military superpower. The asymmetry between the two nations economically and militarily is obvious and with the given situation if they refuse to export materials to us or disruption is caused by a conflict, the electrical equipment industry may have to find alternative[s] and the sooner they do the better it is,” Misra added. Hartek Group, an energy company that builds substations, told ET that they expect a “2-3%” impact on their bottom line after switching from imports.