India’s competitiveness in the electronic sector willl increase in the event of the US imposing reciprocal tariffs. With around 20 per cent tariffs being implemented across the board for all products from China/ Mexico (unlike in the past, when these categories were exempted), a sustained ramp-up of smartphone exports from India.
“Some of the leading players in India have already started taking steps to capitalise on this including Samsung/ Apple who are sourcing around 23 per cent/15 per cent of global production from India in FY25, while Motorola/ Google have also started exporting meaningfully,” global research firm Nomura said.
In terms of values, Nomura said India exported electronics worth $2,549 million in FY20, which has grown to $11,125 million in FY24 and estimated to reach $11,454 million in the current financial year.
But, in terms of imports to India from the US, the growth rate as well as revenue are comparatively low in the last five years. India imported electronics worth $2,616 million in FY20 from the US which grew at $3,057 million in FY24 and estimated to close the current financial year at $4,116 million.
According to Nomura, currently, import of fully assembled mobile phones attract 15 per cent duty, while imports of wearables/ hearables, televisions and airconditoners attract 20 per cent duty. This is compared to no import duty in the US.
However, most subcomponents for printed circuit board assembly (PCBAs), cameras, and displays have zero import duty in India, IT hardware has zero duty, while components such as displays, PCBA, and mechanics are at 10 per cent duty. Given that imports are largely components and hardly any fully assembled products (except laptops) are imported, the weighted effective import duty rate is quite low at three-four per cent for India, it said.
According to Electronics and Computer Software Export Promotion Council (ESC), North America has emerged as the largest importer of India’s electronic instruments, accounting for 30.57 per cent of sectoral exports, followed by Europe (23.26 per cent), and Singapore, Hong Kong, and other South Asian countries (16.09 per cent).
Significant growth
“The significant growth in exports highlights the effectiveness of our strategic initiatives and the dedication of our manufacturers. As we continue to strengthen our presence in key markets like North America, Europe, and Singapore, we remain committed to supporting our exporters in navigating the global landscape,” Sandeep Narula, Chairman of Global Outreach at ESC, said.
However, Faisal Kawoosa, Chief Analyst and Founder of Techarc said that currently Indian exports of smartphones are led by Apple, so any kind of reciprocal tariff is going to hurt them more than any other brand.
“I think, if this gets implemented, the US will have an exclusion list and insulate Apple, Google (Pixel), Dell and HP out of it, which are either already or planning to export out of India. This will, however, result in trade imbalance giving few brands an edge. In such likelihood, it would be in our interest to look into US demands and help all brands exporting or planning to export out of India by offering a level playing field,” he said.