Electronics Manufacturers Face Roadblocks as Gold Compound Imports Restricted After China’s Rare Earth Curb

India's efforts to boost electronics manufacturing under the Make in India initiative have encountered major challenges. With import curbs on crucial gold compounds and Chinese restrictions on rare earth exports, electronics manufacturers are battling serious supply chain interruptions and production delays.

Gold Compound Import Curbs Add to Industry Woes

The Directorate General of Foreign Trade (DGFT), in its June 17, 2025 order, moved imports of colloidal precious metals and compounds from the “free” to “restricted” category. This includes Potassium Gold Cyanide (PGC), a critical raw material used in manufacturing printed circuit boards, connectors and semiconductors. The sector, already affected by China’s earlier export restrictions on rare earth magnets, is now facing a dual supply crisis.

Impact on Make in India and Local Production

Industry bodies such as the India Cellular and Electronics Association (ICEA) and Electronic Industries Association of India (Elcina) have expressed concern over the recent policy changes. They highlight that the unpredictability caused by these curbs could stall investments, especially in essential sub-assemblies. Notably, key government initiatives like the Production Linked Incentive (PLI), Electronic Component Manufacturing Scheme (ECMS), and SPECS could face setbacks if disruptions continue.

Customs Clearance Delays Halt Production

Several manufacturers reported that customs authorities have started withholding consignments containing gold-based compounds. These materials are used in trace amounts but are vital to production. Delays in customs clearance are now causing a chain reaction affecting supply timelines and manufacturing schedules, especially in electronic hubs like Noida and southern states.

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Rare Earth Magnet Restrictions from China Stir Global Concerns

China’s export licensing regime for rare earth elements like terbium and dysprosium, enforced in April 2024, has already put pressure on global supply chains. These elements are essential in NdFeB magnets—crucial for high-performance electronics, audio systems, electric vehicles, medical devices and more. With gold compounds also restricted now, the manufacturing ecosystem faces a compounded risk in maintaining momentum.

Jobs and Investment Under Threat

According to Elcina, the ongoing disruptions place around 21,000 jobs at risk in sectors such as audio electronics. Companies like Foxconn have already faced operational delays due to the unavailability of imported capital goods and trained workers from China, affecting facility expansions and machine integration in India.

Conclusion

The Indian electronics manufacturing industry is currently navigating a turbulent landscape. Import curbs on gold compounds, alongside China’s rare earth export restrictions, are threatening the pace of growth under flagship initiatives. Coordinated efforts between stakeholders and policymakers will be essential to restore supply chain stability and safeguard investments and employment in this sector.

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