Amidst uncertainty on reciprocal tariffs to be imposed by the US, electronics manufacturers in India, including iPhone-maker Apple’s vendors, worry about shifting base to other favourable nations like China or Vietnam and losing opportunity to export to the US market.
According to industry veterans, US is the biggest export opportunity for India. “If we don’t address the reciprocal tariff challenges, they can severely impact our electronics manufacturing aspirations and can lead to shift of large global value chains (GVCs) from India to other favourable destinations,” said an industry source, not wishing to be named.
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India’s total electronics imports are valued at $89.7 billion in FY23-24. ICs (processors, controllers, amplifiers, memory, logic circuits, etc) from the US grew from $105.46 million (2023-24) to $505.21 million (April-November 2024-25), as per India Cellular & Electronics Association (ICEA) that represents manufacturers such as Apple, Samsung, Xiaomi, Oppo and Vivo.
“Smartphones have emerged as India’s top export commodity to the US, buoyed by the success of the production linked incentive (PLI) in mobile phone manufacturing. Shipments to the US have grown significantly over the last two-three years,” ICEA said recently. Under the PLI scheme for mobile phones, India has become a major global hub for smartphone production. India aims to scale this further, leveraging the shift away from China’s manufacturing ecosystem, it said.
The biggest worry is that vendors of Apple or Samsung like Dixon, Foxconn, Pegatron and Tata Electronics, that have set up their facilities in India and are also on the expansion mode, may have to rethink their further investments if the reciprocal tariff by the US impacts their exports in the long run. “The new tariff rates would make their products expensive as compared to imports from other friendly nations like Taiwan or Vietnam,” an industry veteran told businessline.
ICEA was optimistic that a well-structured Bilateral Trade Agreement (BTA) between two partners who trust each other will be hammered out.
“Offering reciprocal zero duty in the potential BTA for smartphones, hearable and wearables, colour televisions, consumer electronics and appliances, lighting etc., is not an extraordinary step for us, since we already provide that treatment to FTAs with Japan, Korea and ASEAN (Vietnam, Thailand, Indonesia),” Pankaj Mohindroo, Chairman, ICEA, said recently.
India’s electronics exports to the US
According to industry estimates, India’s electronics exports to the US were around $10 billion, of which 56 per cent were smartphones—a share that has already risen to around 62 per cent in the current fiscal year. The long-term impact of a cautious optimistic outlook is the ballooning of India’s electronics exports to the US from the current level of $10 billion to $80 billion, an 800 per cent growth by 2030.
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India right now has no challenge on smartphones and laptops, because it has zero per cent tariff on both. The challenges are only on consumer electronics – appliances like refrigerators and air conditioners, and telecom equipment, it said.
Shifts in global supply chains since the US imposed tariffs on Chinese goods in 2018 have reduced China’s direct exports of electronics to the US. However, many Chinese firms have relocated production to Vietnam, Taiwan and Mexico, retaining a Chinese-centric supply chain. India stands out as the alternative that not only moves assembly out of China geographically but also delinks from Chinese ownership structures – a crucial distinction that can protect the US from indirect Chinese dependencies.
