Indian electronics manufacturers face double whammy with import curb on gold compounds | Company Business News

New Delhi, Jul 6 (PTI) India’s electronics manufacturing sector, which has been struggling with China’s restrictions on rare earth magnet exports, faces a double whammy with import curbs on gold compound — a key raw material.

Rare earth magnets have diverse utility ranging from computer chips and electronic components to electric vehicles, wind turbines, and medical equipment.

Gold compounds are also widely used in critical electronic components to improve flow of electric current in motherboards, semiconductors etc.

The Directorate General of Foreign Trade (DGFT) in an order dated June 17 reclassified imports of colloidal precious metals and compounds from “free” to “restricted” category.

The development followed restrictions from China on export of rare earth magnets and specialized capital goods.

India Cellular and Electronics Association (ICEA) in a letter to the Ministry of Electronics and IT said that the import restriction has brought in uncertainty in the efforts of industry to scale up domestic electronics manufacturing.

“The recent import restriction has affected the availability of this critical material. This has introduced uncertainty in light of ongoing efforts to scale up electronics manufacturing. The resulting policy unpredictability may also deter investment in critical sub-assembly segments where these inputs are essential,” ICEA Chairman Pankaj Mohindroo said.

While demanding measures to resolve the import of gold compounds, Mohindroo said the Electronics Component Manufacturing Scheme (ECMS) aims to localise key components such as printed circuit boards, camera modules, mechanical parts and connectors — all of which require a gold based plating materials as part of the manufacturing process.

Electronic component makers body Elcina in a letter to the Ministry of Electronics and IT said that customs authorities have begun holding consignments of Potassium Gold Cyanide (GPC) and similar materials, resulting in significant delays to production lines and disruption to supply chains in the electronics manufacturing sector.

Elcina Secretary General Rajoo Goel said that Potassium Gold Cyanide, colloidal precious metals, and other compounds are used as critical raw materials in the manufacturing of electronic components, including connectors, high-end PCBs and semiconductors, among others.

“These inputs are imported on an actual user basis and consumed entirely within the manufacturing process. They do not enter the bullion trade or precious metal markets. Their import is critical for captive consumption by electronics manufacturers and involves their usage in miniscule quantities (trace usage) in finished goods,” he said.

Elcina has said that import restriction will adversely impact the ease of doing business for electronic components manufacturers and ‘Make in India’ to achieve the goals of the government’s flagship schemes like ECMS, PLI and SPECS.

In April 2024, China implemented strict export licensing on rare earth elements like terbium and dysprosium — key inputs for high level performance NdFeB (Neodymium-Iron-Boron) magnets used in consumer electronics.

Elcina estimates that over 21,000 jobs are at risk in Noida and South India in the country’s audio electronics segment due to restrictions imposed by China on export of rare earth metals.

Electronics manufacturing services companies are also facing problems in importing capital goods from China which is delaying their production.

Recently, iPhone maker Foxconn had to send back hundreds of Chinese technology professionals who were helping the company’s India unit in expansion of manufacturing capacity and training professionals for handling machines.