Is China using 'silent sanction' on talent to target India's mfg sector?

Over 300 Chinese technicians exit Apple supply chain; experts believe that the move may slow down skilling and affect efficiency but not production quality in Indian manufacturing sites

India’s ambitions to be a global manufacturing hub have hit a snag as China tightens its grip on cross-border movement. Latest developments involve Foxconn, Apple’s largest contract manufacturer, repatriating hundreds of Chinese engineers and technicians from its iPhone production facilities in southern India.

 

Foxconn and Apple informed the Indian government, but reportedly left without a formal explanation. However, the timing suggests that the move is more than just an operational reshuffle.

 

China tightens the tap on talent and tech

Earlier this year, China unofficially urged regulatory bodies and local governments to discourage the outflow of advanced technology and skilled labour to countries like India and Vietnam, Bloomberg News had reported. Though unannounced, these restrictions have been interpreted in policy circles as a form of “silent sanction” that limits the mobility of both talent and tools vital to complex manufacturing.

   

These restrictions, at the time, were viewed as a countermeasure to US trade policies, which imposed significant tariffs on Chinese exports. This move, led by the Donald Trump-led US government, further encouraged companies that were already seeking ways to diversify supply chains and reduce their manufacturing reliance on China. 

 

300 Chinese engineers recalled from Foxconn India

Apple adopted a ‘China+1’ strategy following disruptions caused during the pandemic. Despite its shift away, Apple CEO Tim Cook has long credited China’s workforce expertise and talent as fundamental to its production model. Foxconn had deployed Chinese experts to fast-track iPhone production lines and train local workers in its Indian facilities.

 

Now reports suggest that more than 300 Chinese engineers and technicians have quietly exited Foxconn’s facilities in Tamil Nadu and Karnataka over the past two months, with those remaining being predominantly Taiwanese.

 

Their departure comes as Apple prepares for production of its next-gen iPhone 17 and readies its 300-acre Devanahalli facility in Karnataka. The absence of Chinese engineers may slow down skill transfer, affecting production time and therefore efficiency, it does not impact the overall product quality.   

India benefits from China+1, PLI schemes

In recent years, India has benefited from global efforts to diversify supply chains away from China. Major toy-makers like Italy’s Dream Plast, Microplast, and Incas began shifting production to India last year. During this time, India also witnessed a surge in toy exports. 

 

India’s ₹17,000 crore Production-Linked Incentive (PLI) scheme also attracted global players. Taiwanese tech firm Asus launched an assembly line with VVDN Technologies in Manesar earlier this year, while HP partnered with Dixon Technologies to locally produce laptops and PCs.

 

Following US tariffs on Chinese goods in April, even Chinese companies began approaching Indian exporters to fulfill US orders. At the Canton Fair in Guangzhou, several Indian firms reported being offered deals to supply goods on behalf of Chinese companies, who would earn commissions in return.

Complex India-China relations

While high-level diplomacy between India and China has resumed in recent months, friction remains between the two neighbouring nations. Direct flights between the two countries have yet to resume, and Indian visa policies for Chinese nationals remain tight. India also continues to ban several Chinese-origin mobile apps, including TikTok, while China maintains selective export bans on fertilisers and other commodities.

 

Manufacturers shifting to India and Vietnam to reduce reliance on China have put the nations in direct competition. Moreover, India itself is also working to lessen its dependence on China in key sectors, including critical minerals and technology.

 

Indian production of iPhones grows

Apple plans to produce most of the iPhones for the US market in India by the end of 2026. iPhone manufacturing partners in India, including Tata Electronics, Wistron, Pegatron, and Foxconn, have surpassed the 20 per cent domestic value addition (DVA) mark across all iPhone models, Business Standard reported at the end of last month. Moreover, India exported iPhones worth ₹1.5 trillion (free on board value) in the financial year that ended on March 31, 2025.

 

This growing production has also led to criticism from US President Donald Trump, who has demanded that Cook move all Apple manufacturing to American soil. Yet high labour costs and complex regulatory requirements continue to make large-scale US production unviable.