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Journalism of Courage
As US President Donald Trump announced “retaliatory” tariffs on a slew of countries, demolishing an over 75-year-old global trading system with the imposition of an across-the-board baseline levy, electronics manufacturers that are producing and exporting from India acknowledged that while it could result in a cost barrier, the measure could also offer some advantage to India owing to higher levies imposed on its competitors. Immediate risks, however, arise from countries like Brazil, Saudi Arabia and the United Arab Emirates (UAE).
However, some countries – with similar ambitions as India in deepening their electronics supply chain – may have received a more favourable levy than New Delhi. Key among them is Brazil, which will be subjected to the baseline 10 per cent levy, and as a result could draw away some investments from India. Similarly, Saudi Arabia and UAE, too have gotten away with just the baseline levy, and Philippines has been charged with a lower rate than India at 18 per cent.
Although, it is worth noting that the tariff-setting mechanism by the US appears to correlate primarily with bilateral trade imbalances rather than purely tariff rates or non-tariff barriers. Clarity on the precise calculation methodology remains limited, introducing uncertainty into future negotiations.
“Saudi Arabia and UAE represent near-term threats to India’s electronics exports due to their SEZs, competitive manufacturing environments, and potential labour-cost advantages. Brazil’s favourable tariff treatment, despite historical trade barriers, adds to strategic ambiguity and warrants careful monitoring,” electronics lobby group India Cellular & Electronics Association (ICEA), said in a statement. The group represents companies including Apple, Google, Vivo, Oppo, and Dixon among others.
According to the Economic Survey 2024-25, the domestic production of electronic goods in India increased from Rs 1.9 lakh crore in FY15 to Rs 9.52 lakh crore in FY24, growing at a compounded annual growth rate of 17.5 per cent. However, the country has made limited progress in localising electronics design and component manufacturing. It has recently announced a Rs 23,000 subsidy scheme to boost the latter.
One key company in focus is Apple. Its stock was down more than 7 per cent in after hours trading post Trump’s measure as many of its key production hubs – China, Vietnam and India – were hit by tariffs. In India, the company assembles around 10 per cent of its iPhones through its contract manufacturers Foxconn and Tata Electronics, and is the prime beneficiary of New Delhi’s production linked incentive (PLI) scheme for smartphones.
Apple’s business in India is considered crucial in the power corridors of New Delhi, as the company is seen as a flagbearer for the manufacturing narrative it wants to project, while drawing in more marquee names.
Calling for a comprehensive trade agreement between India and the US, ICEA said that in fiscal year 2023- 24, India exported electronics worth $10 billion to the United States, and estimated that to grow to $80 billion annually across diverse electronics product categories in the coming years, contingent upon sustained policy support and a conducive tariff regime, with bilateral trade crossing $100 billion.
“Tariffs may impact India’s booming exports, but India could remain competitive as China, Vietnam, Taiwan and Thailand face even higher tariffs. India’s low electronics imports from the US provide room for tariff adjustments to maintain trade balance,” said Ashok Chandak, president of India Electronics and Semiconductor Association (IESA).
Beyond smartphones and electronics components, manufacturers echoed a similar cautious tone. “The 27 per cent tariff under a Trump-led trade agenda will impose a notable cost barrier on Indian hardware exports to the US. However, this remains comparatively lower than tariffs levied on other major Asian manufacturing hubs . As a result, India-based manufacturing still holds a competitive edge,” said Paritosh Prajapati, CEO, GX Group, a telecom equipment manufacturer.
