Over the weekend, the Indian electronics and semiconductor industry breathed a sigh of relief when the Trump administration excluded several electronic items from the reciprocal tariffs. However, there are indications from the US that this reprieve may be temporary.
Key tech products—including smartphones, laptops, tablets, semiconductor components, displays, storage devices, and computer processors—were exempted from the reciprocal tariffs. The Trump administration stated this move protects global supply chains, benefits manufacturers like Apple and Samsung, and ensures continued affordability for US consumers. Notably, the development benefits Indian electronics majors like Tata Electronics, Foxconn India, and Pegatron India, besides Apple and Samsung, wh ..
Indian electronics players view these exemptions as a temporary relief. Experts argue that products like smartphones, laptops, and semiconductor components were exempted from these tariffs to avoid immediate price hikes for US consumers and to shield American tech companies like Apple and Nvidia from financial strain.
Notably, Trump has explicitly indicated that semiconductors will be a key focus area for upcoming tariffs. US Commerce Secretary Howard Lutnick confirmed that “special tariffs” targeting semiconductors and electronics will probably be rolled out in the next month or two, even though no specific rate has been set yet.
The US remains heavily reliant on imports for semiconductors, essential for electronics manufacturing, with substantial shipments originating from India. In fiscal year 2023–24, India’s electronics exports totalled $29.12 billion, marking a 23.6% increase over the previous year. In fact, smartphones emerged as the leading category, representing 60% of electronics exports in FY25, an increase from 52% in the previous year. Apple’s iPhones alone contributed over $17 billion—approximately 75% of to ..
However, the domestic electronics industry worries about Trump’s next action, specifically fearing that newer items in Trump’s tariff list, including semiconductor tariffs could further complicate already strained supply chains. Sanjay Agarwal, Managing Director of Faridabad-based Globe Capacitors, states that Trump’s “Nobody getting off the hook” remark clearly spells his long-term intention,” which has instilled fear within the sector.
According to him, the path ahead will not be easy for exporters. “What is particularly concerning is that countries like Vietnam, Thailand, and Indonesia, despite facing higher base tariff rates, benefit from bilateral or multilateral trade agreements with the US, giving them a distinct and strategic edge over Indian manufacturers,” he says.
In recent years, the country has reaped the rewards of the Production-Linked Incentive (PLI) scheme launched in 2020, which offers financial incentives to local manufacturing. However, with the scheme set to expire in 2026 and new US tariffs on the horizon, there is increasing concern that India’s cost advantage may soon diminish and that Trump’s reciprocal tariff strategy could jeopardise this favourable arrangement. For companies like Apple, which have leveraged India’s PLI scheme to expand pr ..
For many in the industry, the 90-day pause announced by the US administration offers a narrow window of opportunity. The critical question, however, is: can India strategically recalibrate its trade policy, or will it simply delay broader disruptions?
Suggesting an immediate solution, Agarwal emphasises that a recalibrated bilateral framework ensuring ‘equitable market access and rationalised tariff barriers’ would not only expand export opportunities for Indian businesses but also provide US industries with resilient, reliable, and diversified supply chains. “Exporters are closely evaluating this interim period. Strategic cost management, supply chain diversification, and engagement with policymakers are now key components of industry respon ..
China’s Loss, India’s Gain
Electronics industry players broadly contend that while reciprocal tariffs may undermine India’s cost advantage in the US market, exemptions and ongoing geopolitical realignments are also opening new avenues for growth. As a result of the US exempting smartphones, tablets, laptops, flat-panel monitors, and select semiconductor components from reciprocal tariffs previously imposed on exports from countries, including China, India, and Vietnam, now en ..
Pankaj Mohindroo, Chairman of ICEA, believes the latest set of tariff realignments by President Trump will lead to “significant gains” and a shift in electronics manufacturing away from China. “China still has 20% of the manufacturing of iPhones, laptops, tablets, and watches. Only reciprocal tariffs have been removed for China. India has a zero tariff on iPhones and all smartphones, laptops, and tablets exported to the US. Vietnam also has a zero tariff on all Samsung and other smartphones, lap ..
As Chinese suppliers face stiff levies in the US, industry insiders reveal they are offering Indian manufacturers discounts of up to 5% on components, helping Indian firms reduce input costs. Industry estimates suggest this could boost profit margins by 2-3%, enhancing price competitiveness and potentially passing benefits on to global buyers.
Rajoo Goel, Secretary General of the Electronic Industries Association of India (ELCINA), says while Trump’s move underscores the US’s intent to create a level playing field, in many segments, it still places Indian manufacturers at a disadvantage, especially when compared to competing economies that enjoy preferential access through trade agreements. “This highlights a pressing need for India to accelerate efforts toward a comprehensive and strategic trade arrangement with the US,” he says.
“The electronics industry relies on predictability and parity in trade policies. Sudden shifts in tariff structures not only affect pricing and supply chain decisions but also dampen investor confidence. The 90-day pause on implementation offers a brief yet critical opportunity for dialogue and course correction, he adds. Additionally, he urges policymakers to engage proactively during this window to address asymmetries, safeguard our industry’s interests, and enhance India’s global competitiven ..
Path Ahead: Agreements, Incentives, and Integration
Although the US has not provided a timeline for announcing new tariffs on semiconductors and electronics, leaving everyone in suspense, experts say India’s electronics industry stands at a pivotal juncture. Industry insiders note that the turbulence in global trade flows is prompting multinational firms to diversify their sourcing and production bases, with India fast emerging as a credible alternative. Companies like Apple ..
Industry experts also recognise that government initiatives, such as PLI and the newly introduced Electronics Component Manufacturing Scheme (ECMS), have had a positive impact on the sector's growth. By supporting domestic production of key sub-assemblies like PCBs and capacitors, these policies aim to reduce import dependence and attract investment in the broader electronics ecosystem.
However, industry experts caution that while India currently enjoys a window of advantage, sustaining growth will depend on more than favourable geopolitics. Strategic trade negotiations—particularly a bilateral trade agreement with the US— strengthening domestic supply chains and enhancing backward integration to reduce reliance on imported components will be key to maintaining momentum in the face of evolving global competition.
Source Name : Economic Times