Introduction

A container ship at India’s Mundra Port. India’s drive to boost domestic manufacturing under the Make in India initiative has coincided with record trade integration with China. In the fiscal year 2024–25, India’s trade deficit with China surged to around $99.2 billion – the highest ever. This gap was fueled by a flood of imports from China, especially electronics, machinery, and other industrial inputs, even as India seeks self-reliance. Policymakers and analysts note that while Make in India aims to reduce import dependence, in practice “Make in India” often still relies on “Made in China” for critical components and raw materials. The following report examines the extent of supply chain dependence on China in four key sectors – electronics, textiles, pharmaceuticals, and rare earth metals – during 2023 through mid-2025, highlighting data-backed examples of reliance, the strategic vulnerabilities that result, and areas where India is making progress despite these dependencies.

China-Linked Supply Dependencies by Sector (2023–2025)

To show the magnitude of dependency, summarises China’s contribution to India’s supply chain for chosen segments. Every sector has a substantial portion of its imports coming from China to show the extent to which Chinese inputs have been to India’s manufacturing sector in the last few time.

Sector

Reliance on Chinese Imports (2023–2025)

Electronics & Electrical China accounts for ~44% of India’s electronics, telecom, and electrical imports (FY2024). Crucially, an estimated 75% of electronic components used by Indian manufacturers are sourced from China, including chips, circuits, batteries, and smartphone parts.

Textiles & Apparel Roughly 40% of India’s textile and clothing imports by value come from China (about $3.2 billion out of $7.6 billion in recent data). These include synthetic yarns, fabrics, and other inputs where China is a dominant supplier.

Pharmaceuticals (APIs) Aproximate 70% to 72% of India’s imports of bulk medications as well as active pharmaceutical Ingredients (APIs) essential components of medicines – are sourced from China. In FY2023–24, India imported ₹27,055 crore worth of APIs from China (≈$3.3 billion), about 71.7% of total API import value and 76% of import volume.

Rare Earth Metals India relies on imports for nearly 100% of its rare earth permanent magnets (like Neodymium-Iron-Boron magnets), with ≈90% of these magnet imports coming directly from China. China also controls over 90% of global rare earth processing capacity, making India heavily dependent on Chinese sources for these strategic materials.

Table 1: Chinese supply chain contributions to key Indian sectors. In each of these sectors, China is the largest import source, often providing a large plurality or majority of India’s total import requirements.

Electronics: Heavy Dependence Amid Booming Output

Electronics is a flagship sector for Make in India, yet it remains one of the most China-dependent supply chains. In FY2024, India’s imports of electronics, telecom, and electrical products reached a staggering $89.8 billion, with over half of these coming from China (43.9% directly from China, and about 56% if Hong Kong is included). Chinese-made inputs are ubiquitous – from semiconductor chips and printed circuit boards to displays and battery cells. Chinese imports account for around 75% of the electronic components utilized by the manufacturing sector in India. A recent industry report found it was “almost 75% of the smartphone components used in India are imported from China,” that highlights the widespread dependence on Chinese components in the electronic consumer products. Such dependency creates structural vulnerabilities. Indian manufacturers assembling smartphones, consumer appliances, or telecom equipment often find that critical parts (like integrated circuits, processors, or display modules) must be sourced from China due to cost and availability. This was evident in 2024 when India’s semiconductor and electronics imports surged, even as local production of finished devices grew. In fact, experts observe that India’s rising exports of electronics are “fueling imports from China” because many sub-assemblies and components are not made domestically. The strategic risk is that any disruption in Chinese supplies – whether from geopolitical tensions or export restrictions – could cripple India’s electronics assembly lines. Analysts warn that this “heavy dependence on Chinese imports presents formidable challenges to India’s strategic autonomy and economic security,” especially in tech industries. A vivid example is the solar energy segment: about 70% of India’s solar power equipment (panels, cells) comes from China, meaning India’s renewable energy push also hinges on Chinese supply chains.

In spite of these worries There are indications of improvement in the reduction of the dependence of electronics. The policies of the Government, such as production-linked incentive (PLI) scheme has attracted big electronics makers to India and led to an increase in the production of local devices. By 2025, India has become the world’s 3rd-largest smartphone producer and exporter, with mobile phone exports jumping to $24 billion in FY2024–25 (up 55% from the previous year). Even tech giant Apple now manufactures roughly 20% of its iPhones in India (unthinkable a decade ago), and Samsung and others have expanded assembly operations. This Make-in-India success in downstream electronics has created jobs and reduced finished product imports. However, industry observers note that the success is largely in final assembly: India still imports most upstream inputs like chips, display panels, and camera modules from China and East Asia. The government has responded with measures to deepen the supply chain – for instance, increasing import duties on certain components and imposing quality control norms (BIS standards) on imports to encourage local sourcing. There are also joint ventures emerging between Indian firms and foreign (including Chinese) component makers to localize production of parts like display modules and battery cells. While these efforts are at an early stage, India’s electronics ecosystem in 2023–25 is gradually broadening, aiming to raise domestic value addition. The India Cellular & Electronics Association projects that domestic production of components and sub-assemblies will grow substantially by 2030 under these initiatives. In summary, India’s electronics sector showcases a balancing act – impressive growth in local manufacturing alongside a persistent reliance on Chinese inputs that is only slowly beginning to ease.

Textiles and Apparel: Chinese Inputs in a Traditional Strength

The industry of textiles and clothing is a major part of India’s strengths. It employs millions of workers and providing exports. Yet, hereMake in India is interspersed in Made in China in the supply chain. India imports large quantities of yarns, textiles as well as textile raw material from China. Recent data show India’s textile and clothing imports totaled ~$7.6 billion, of which about 42% (≈$3.2 billion) came from China. Chinese-origin imports include synthetic filament yarns, polyester fibers, knitted fabrics, and technical textiles, where China often enjoys cost or scale advantages. For instance, imports of synthetic filament yarn from China have surged dramatically in recent years, reflecting India’s growing demand for man-made fibers that domestic producers haven’t fully me. One report noted Chinese textile and fabric imports more than doubled from $1.3 billion to $2.7 billion over a period, underscoring a rapid rise in dependence on Chinese materials.

Reliance on China in this sector raises economic and competitive concerns. Many of the products India buys from China – textiles, apparel, home furnishings, etc. – are categories traditionally dominated by India’s own Micro, Small & Medium Enterprises (MSMEs) The influx of cheaper or mass-produced Chinese fabrics and garments can undercut small Indian weavers, textile mills and garment makers. It also means that even Indian apparel exporters often rely on imported Chinese inputs (for example, a garment “Made in India” might be sewn in India but from Chinese synthetic fabric). This situation exposes a vulnerability: if Chinese supplies were disrupted or became expensive, India’s textile industry might face shortages of certain yarns or technical fabrics. Conversely, when Chinese goods flow freely, India’s trade balance suffers and local producers face stiff competition. Capacity utilization in some domestic textile segments has reportedly declined in recent years, partly attributed to competition from imports.

On the positive side, India retains a robust base in natural fibers (cotton, jute, etc.) and apparel craftsmanship. Make in India has seen government support for the textile sector, such as the PM-MITRA park scheme for integrated textile parks and a PLI scheme focusing on man-made fiber textiles and technical textiles. These policies aim to boost domestic manufacturing of the same synthetic products that are currently imported. Progress has been modest but notable: industry reports suggest that new polyester and textile plants are being set up, and India is positioning itself to capture orders as global brands look for a “China+1” sourcing strategy in apparel. Indeed, geopolitical shifts have some major buyers seeking to diversify from China, which opens opportunities for Indian textile exporters in 2024–25 and beyond. However, a Hinrich Foundation analysis points out that India so far has “failed to achieve manufacturing targets” in sectors like specialty textiles, meaning reliance on imports persists. In summary, India’s textile sector in the 2023–2025 period shows strength in traditional areas alongside a growing dependence on Chinese synthetic inputs. Reducing this dependence will require enhancing domestic capacity in man-made fibers and protecting MSME players – a gradual process that India has only begun to undertake.

Pharmaceuticals: API Dependence as a Strategic Vulnerability

In pharmaceuticals, India is a global powerhouse in generic drug production, yet it remains highly dependent on China for upstream ingredients. The critical link here is APIs (Active Pharmaceutical Ingredients) and drug intermediates – the chemical raw materials used to formulate medicines. India sources a large share of these inputs from China, which has become the world’s leading API manufacturer. Between 2023 and 2025, roughly 70–75% of India’s API imports (by value) have consistently come from China. Government data for FY2023–24 show India’s bulk drug and API imports totaled ₹37,722 crore (≈$4.6 billion), with ₹27,055 crore (≈$3.3 billion) coming from China. This means about 72% of India’s API import bill is paid to China, a share that has inched up from about 68% in 2019–20. In volume terms the dependence is even starker: 76% of India’s imported pharmaceutical raw material tonnage in 2023–24 was from China. These imports cover key ingredients for antibiotics, painkillers, vitamins, anti-diabetics, and other essential drugs. For example, China is a dominant supplier of fermentation-based APIs like penicillin and many affordable generic drug components that Indian formulation companies rely on.

This heavy reliance on Chinese APIs is widely regarded as a strategic vulnerability for India. If geopolitical tensions or supply disruptions (like factory shutdowns or export curbs in China) occur, India’s ability to produce vital medicines could be jeopardized within weeks. This risk became apparent during the COVID-19 pandemic, when global supply chain disruptions raised alarm in New Delhi about over-reliance on one country for medicine ingredients. As the USIP observes, India’s growth industries like pharmaceuticals are critically tied to Chinese imports – a fact that could undermine India’s resilience if China were to wield export restrictions as an economic weapon. Indian officials have openly called this dependency “unacceptable” and have pushed for remedies.

It is to its credit that India has adopted coordinated steps taken in 2020 to decrease the API’s dependence on China . The Government The company has launched the dedicated PLI scheme to facilitate manufacture of APIs domestically In 2020, the company will offer Rs 6,940 crore In incentives to create 41 crucial API Locally .Parallelly, a ₹15,000 crore PLI for the pharmaceutical sector (2021–2029) is supporting broader drug manufacturing, and plans for Bulk Drug Parks with common infrastructure are underway. By 2023–24, these efforts were slowly bearing fruit: a number of new API plants were commissioned, and India started making certain key starting materials (like fermentation-based vitamins and some antibiotics) domestically for the first time in years. There are early signs of reduced growth in imports – for instance, during April–December 2023, India’s API imports from China actually dipped by over 9% year-on-year, hinting at initial import substitution. However, the overall volumes remain large and “India’s overall dependence on Chinese API imports will remain high” in the near term. Analysts point out that rebuilding an indigenous API industry takes time and sustained investment, given China’s massive scale and cost advantages built over decades. Thus, through mid-2025 India’s pharma sector is making incremental progress (e.g. local firms now supply a bit more of the domestic API demand than before), but the lion’s share of critical drug ingredients still arrives from China. Reducing this dependency is not just an economic goal but a strategic imperative for health security, and it remains a work in progress.

Rare Earth Metals: Near-Total Import Reliance and a Wake-Up Call

Rare earth metals – especially the processed rare earth magnets used in high-tech applications – represent perhaps the most extreme case of India’s supply chain dependence on China. Rare earth elements like neodymium, dysprosium, and others are crucial for manufacturing permanent magnets that go into electric vehicle (EV) motors, wind turbines, mobile phones, and defense systems. China has a stranglehold on this sector: it not only has the largest rare earth reserves, but it also controls about 90% of the global capacity for processing rare earths into finished magnets. As a result, India currently imports virtually 100% of its rare earth magnet needs, and around 90% of those imports come directly from China. In other words, whether it’s an Indian-made electric car or a missile system, the high-performance magnets inside are almost certainly imported from Chinese suppliers.

The reliance slipped beneath the radar until recently and then it was an issue that was front and center due to China’s trade restrictions. In 2023-2014, China tightened export licensing on some rare earth items (like special magnet alloys that contain dysprosium and terbium) in the strategic trade policies. This move sent shockwaves through Indian industry – especially automakers and electronics firms – which suddenly faced rising prices and potential shortages of critical magnet materials. Industry bodies noted that Chinese magnet prices jumped, and alternatives from Japan or Europe were 2–3 times more expensive and insufficient to meet India’s fast-growing demand. Notably, India’s imports of permanent magnets had been skyrocketing even before this: in FY2024–25, India’s magnet import volume nearly doubled to about 53,700 tonnes (from ~28,000 tonnes the previous year) to keep pace with EV and electronics manufacturing. The trade value of these magnet imports, though modest (around $200 million in 2024–25), belies their outsize strategic importance. The situation was described as a “wake-up call” by India’s Commerce Minister after China’s restrictions, underlining how a chokehold on rare earth supplies could stall India’s high-tech industries.

In response, India has pivoted to urgent action. By mid-2025, the government, industry, and research institutions have joined forces to jump-start domestic rare earth magnet production. On June 20, 2025 the Indian Ministry of Electronics and IT announced partnerships to improve magnetic manufacturing that is competitive, which includes the signing of a transfer agreement between an Indian firm that will begin making NdFeB magnets in India. While India does have some rare earth mineral reserves (and a government-owned company, IREL, that produces limited rare earth oxides), it historically under-invested in this supply chain. Now, with demand projected to soar (India’s magnet demand quadrupled from FY2021 to FY2025), building local capacity has become critical. The plans are in the process of setting up in place rare earth processing facilities and magnet assembly facilities funded by the federal government, as well as foreign partnership agreements. In addition, India seeks for ways to diversify the supply of imports, by working with countries like Australia, Vietnam, and Japan to discover additional rare earth resources and recycle magnets of electronic scrap. These efforts are nascent, and in the short run India will continue to rely on Chinese rare earth materials. But the period of 2023–2025 marks a clear turning point where rare earth dependency went from an overlooked issue to a national priority. The rare earth example starkly illustrates the broader theme: for cutting-edge sectors, Make in India’s success will be determined by its ability to ensure and develop its own supply chains that are currently run by China.

Strategic Vulnerabilities in an Integrated Supply Chain

In all these areas india’s dependency upon Chinese imports from 2023 to 2025 is a sign of several threats to its economy and strategy. There is the possibility that supply disruptions could occur. In the midst of geopolitical tensions experts caution that Beijing may exploit its position as the dominant player within supply chains that “disrupt or limit exports of critical components to India” that can “cripple sectors like electronics manufacturing or pharmaceutical production” in the event that alternatives aren’t put available.This is not a hypothetical scenario – China has used trade curbs in disputes with other countries (e.g. rare earths against Japan in 2010, or barley and wine against Australia in 2020), and India’s own experience with Chinese magnet export controls in 2024 showed how exposed some industries are. The economic impact of any such coercion would be amplified by the sheer scale of trade imbalance. China now accounts for about 15% of India’s total goods imports (FY2024), despite India importing virtually no oil from China (usually the largest import item). This means a significant chunk of India’s industrial ecosystem – from smartphone factories to antibiotic producers – is entwined with Chinese supplies.

Secondly, heavy import reliance contributes to a persistently large trade deficit, which in itself can be a vulnerability. India’s deficit with China nearly doubled from ~$54 billion in 2017–18 to ~$99 billion by 2024–25. This implies an outflow of capital and potential exposure to any Chinese price or supply shocks. This also suggests that the country’s industries are struggling to compete against Chinese imports across a variety of industries which has raised concerns over job creation and competition. In particular, industries like furniture, toys, footwear and even textiles, which are made by small businesses in India are seeing Chinese imports take a significant market shares.Dependence on China thus undercuts some Make in India goals, as local firms find it hard to scale up when imports are so dominant.

Thirdly, there’s a technological dependency intertwined with trade dependence. In several high-tech domains (electronics, EV batteries, telecom gear), Chinese firms offer not just cheaper products but often the entire know-how and supply network. India’s manufacturing pivot has revealed gaps in domestic capability – for example, lacking semiconductor fabrication, or production of certain chemicals, has meant India must lean on Chinese technology or equipment. The Hinrich Foundation notes that many of India’s manufacturing “successes” remain downstream assembly, while upstream capabilities and intellectual property reside abroad (often in China). This dynamic could make India vulnerable to technological lags if it cannot develop its own R&D and supplier base, thereby perpetuating reliance.

Policymakers acknowledge these vulnerabilities. India’s strategy has evolved into a nuanced “de-risking” approach: reducing critical dependencies without decoupling entirely. Steps include stricter checks on Chinese investments in strategic sectors, quality regulations to curb sub-standard imports, and engaging in supply chain cooperation with allied nations (for instance, the Quadrilateral Security Dialogue has a working group on critical technologies and materials to help diversify away from China). Notably, India is also carefully leveraging its relationships – partnering with nations like the US, Japan, and Australia to develop alternatives, while also pragmatically allowing Chinese firms to invest in local production where it bolsters resilience (as seen by recent joint ventures in electronics). This dual-pronged position as a security-conscious, yet economically active is a reminder of the difficulties involved in disconnecting from China’s dominant supply chain.

Resilience and Way Forward: Toward a Self-Reliant India?

Despite challenges 2023-2025 is also a time to highlight areas in which Make in India is progressing and the ways in which India can build resilientness. The surge in domestic manufacturing output in sectors like electronics and smartphones is a positive sign. India’s share in global manufacturing is slowly inching up, and success stories (like mobile phone exports overtaking traditional export items) show that given the right policy push, India can become a competitive manufacturing base. These gains, however, have come with the realization that self-reliance doesn’t mean isolation. In fact, one finding is that India’s import dependence has in some cases shifted “from finished goods to upstream goods” – for example, India now assembles more phones at home (fewer phone imports) but imports more components to do so. This nuance suggests that Make in India is a long-term play: it requires nurturing entire ecosystems of suppliers, not just final assembly lines.

The supportive perspective is that India is actively addressing these gaps.

fabs, battery gigafactories, pharma parks, and textile parks with an eye on localizing supply chains over the next 5–10 years. Government data and industry expert commentary in mid-2025 project that local value addition is set to rise – for instance, the Counterpoint Research report indicates increasing local component sourcing in electronics by 2025, and officials expect double-digit growth in domestic content for smartphone manufacturing in the coming years. In pharma, by 2025–26 a number of PLI-backed API plants will become operational, potentially cutting some imports (though maybe not dramatically at first). In rare earths, the urgency sparked in 2024 has led to concrete plans for at least one or two domestic magnet production facilities by 2025–26, which could start substituting a portion of imports. These are incremental but important steps toward resilience.

It’s also worth noting that diversification of trade partners is helping mitigate China-centric risks. India has been sourcing more electronics components from places like Taiwan, South Korea and Vietnam (though they too have supply links to China), and more APIs from countries like Italy and the US for certain drugs. Likewise, for critical minerals, India is in talks with Australia (which has large rare earth reserves) and signed agreements with Japan for critical materials cooperation. Such “China+1” strategies do not eliminate dependency but provide alternatives and bargaining power.

The conclusion is that from 2023 to mid-2025, India’s Make in India Initiative has achieved significant progress in increasing production in India but it is still entangled by Chinese chain of supply in electronics and textiles as well as pharmaceuticals as well as rare earths. The data show that China is still the workshop feeding India’s factories in many respects – a reality that brings efficiency benefits but also profound vulnerabilities. Indian policymakers and industry leaders appear to be acutely aware of this trade-off. The current trajectory suggests a balanced approach: continue expanding India’s manufacturing base (even if it initially relies on imported inputs) while methodically building domestic capacities and guardrails against supply shocks. As one trade expert put it, if India is to serve as a global manufacturing hub and a counterweight in the international arena, it “must find ways to de-risk its economic ties with China” through supply chain diversification and self-reliance where feasible. The period of 2023–2025 has, in many ways, been a period of reckoning and action on this front – laying bare the extent of dependence with hard statistics, but also catalyzing policies and industry responses to ensure that Make in India can thrive with greater independence in the years ahead.

Sources: Trade data from India’s Ministry of Commerce and industry reports; Global Trade Research Initiative analysis; news and expert commentary from Reuters, Times of India, Economic Times, Pharmabiz, United States Institute of Peace, and Hinrich Foundation. All statistical claims are drawn from the latest available data (2023–2025) and official or credible sources as cited. Where information is speculative or part of future outlook, it has been indicated as such.