It hasn’t even been two months since Donald Trump was sworn in as US President and it has been more dramatic than an episode of his reality show The Apprentice. On March 5, Trump underlined this with his plan for reciprocal tariffs on countries such as India and China.
“Whatever they tariff us, other countries, we will tariff them. That’s reciprocal, back and forth,” Trump said in his first address to the joint session of Congress.
In the past, Trump has gone so far as to call India a “tariff king.” Last month, during a joint press conference with Prime Minister Narendra Modi in the White House, Trump had said that India has “been very strong on tariffs.” As an example, he said that a 70% tariff on US cars going into India “makes it pretty much impossible to sell those cars.”
Though Trump specifically mentioned the auto sector and didn’t refer to electronic goods in his address to Congress, Indian electronics are a key item imported by US tech firms. Apple and others have been rapidly expanding their manufacturing presence in India but tariffs threaten to drive up their overall costs and squeeze the advantage of making in India.
Also Read: Meity in touch with commerce ministry to find way around Trump tariffs
Discover the stories of your interest
For context, India’s net exports of electronics amount to $30 billion. Of this, 60% is that of smartphones and two-thirds of those are said to be Apple’s iPhones. So what could be the impact of Trump’s tariffs on India’s booming electronics manufacturing ecosystem as well as the burgeoning semiconductor manufacturing industry?As per market research executive Anurag Agrawal, tariffs signify “significant uncertainty” for these sectors. Reciprocal tariffs are meant to kick off on April 2 alongside additional proposed duties on semiconductors and other critical components.
ETtech“India’s position as an emerging global manufacturing hub faces imminent challenges and potential long-term disruptions,” said Agrawal, who heads Techaisle.
“This timing is especially pertinent as India’s electronics industry has been experiencing unprecedented growth, establishing itself as the world’s second-largest mobile phone manufacturer, underscoring the sector’s vital role in its economy. The smartphone sector stands to be the most significantly impacted by these tariff policies.”
India imposes 15% duty on smartphone imports, whereas the US doesn’t levy anything, making reciprocal tariffs potentially “detrimental” to Indian exports to the American market.
“Apple has been a notable success story of the PLI (production-linked incentive) scheme launched in 2020,” he said.
“However, the situation is further complicated by the impending conclusion of the PLI scheme in 2026, which currently offers a 4-6% incentive for manufacturing in India. Without this incentive and faced with new tariffs in the US market, India’s competitive edge in smartphone manufacturing could weaken considerably.”
Also Read: Indian semiconductor firms see little impact of Trump’s tariff threat
Lori Chang, senior analyst at Taiwan-based tech-research firm Isaiah Research, felt differently. She said Trump’s policies will not only impact production and assembly plants, mainly in China and Mexico, but will also accelerate plans to establish key component manufacturing facilities in countries such as India, Vietnam and Thailand.
“Beyond the relocation of assembly plants from China, major component assembly—including camera modules and battery cells—has seen increasing investment in India in recent years to achieve a supply chain clustering effect,” she said.
“Electronics Manufacturing Services (EMS) and Original Design Manufacturers (ODM) that have already established factories in India will see Original Equipment Manufacturers (OEM) (expand) actively requesting an expansion of their production lines in the country.”
Apple, for instance, plans to increase the share of its manufacturing in India this year, including products like iPhones and AirPods, she said. Additionally, India’s iPad production line is expected to be operational next year, further increasing the country’s role in Apple’s manufacturing.
“However, setting up facilities, workforce allocation, and training remain critical challenges for production in India,” she said. “The mobile phone manufacturing industry in India may face challenges such as inconsistent infrastructure and complicated labour laws. Additionally, India’s production to manufacture high-end smartphones is still developing, and enhancing production competitiveness could be one of the most important challenges at the moment.”
Counterpoint Research’s Neil Shah concurred that in terms of phone manufacturing, India will continue to grow versus China and Vietnam.
So, India might not take a hit with mobile phone manufacturing, but could be impacted more on high-value semi manufacturing, “where it hurts for a country like the US to not have control or keep its chip manufacturing on shore to favour local struggling companies like Intel.”
Techaisle’s Anurag though was not too worried about the impact on India’s semiconductor segment.
“Trump has proposed a 25% tariff on semiconductor imports into the US,” he said. “However, India is unlikely to face immediate repercussions since it does not currently serve as a key semiconductor exporter to the US market. Additionally, with India’s import duty on semiconductors already set at zero, this segment has no reciprocal tariff-related concerns.”
However, Ajai Chowdhry, cofounder of HCL and EPIC Foundation chairman, said that with India looking to be a key player in the global semiconductor race, this tariff episode should serve as a wakeup call. He stressed the need for India to look at creating a thriving market for chips that will be made locally and the growing semiconductor ecosystem so that the country is not dependent on exports, as in the case of mobile phones, for instance.
“Having a robust domestic market serves as a shock absorber, especially in turbulent geopolitical situations such as this,” he said. “We have made a representation to the government with a set of 15 priority chips that we should be making in India to avoid chips that have hardware backdoors and are a huge security risk. We have also provided them with around 30 products where these chips can be used to ensure that there is a robust market for what we produce so that we are not dependent on other countries as we are currently.”
Experts said India is left with no easy options and must consider eliminating import duties on US electronics products, specifically smartphones. Industry body India Cellular and Electronics Association (ICEA) has made a representation to the government to reduce tariffs to 0% for imports from the US — particularly smartphones, wearables/hearables, and consumer electronics.
“If we don’t address the reciprocal tariff challenges it can severely impact our electronics manufacturing aspirations and can lead to shift of large Global Value Chains (GVCs) from India to other favourable destinations,” ICEA Chairman Pankaj Mohindroo said in a letter to Commerce Secretary Sunil Barthwal.
“We must ensure smartphones—our fastest-growing export to the US—are not subject to any retaliatory or reciprocal tariffs. This is critical to preserving our competitive edge, particularly against China and Vietnam.”
It isn’t just tariffs that India should be concerned about. The looming question of whether companies will restructure their investment plans is haunting countries the world over. India is no exception. Especially when it comes to sectors like electronics and semiconductors, the country has left no stone unturned to attract big-ticket investments.
“The hanging sword of reciprocal tariffs as well as higher duties for importing from specific countries is something which has somewhat slowed down or paused many companies’ expansion plans, especially in non-ally countries,” Counterpoint’s Shah said.
India might be better off than other countries as it is seen as a more “favourable nation,” he said, adding that this can’t be taken for granted given changing geopolitical dynamics, with tariffs becoming a point of leverage in negotiations.
Bob O’Donnell, founder of TECHnalysis Research said that while tariffs could have an impact on India, the long-term outlook for the country is favourable.
“The tariff situation is definitely a cause for concern for countries like India,” he said. “But the Indian market is one that no country can ignore, the US included. India should take steps to neutralise the situation in order to pitch itself as an alternative investment destination to China. While there is a concern that electronics companies, especially in the near term, are trying to focus on American manufacturing, there are some big long-term challenges there because manufacturing costs can be much higher and there isn’t the kind of local supply chain for critical components here.”
Nigel Green, CEO of financial consultancy deVere Group, said in a blog post that imports from China have fallen sharply, but rather than bringing production back to the US, firms were shifting to other low-cost alternatives such as Vietnam, India and Mexico.
“While the US plays political games with tariffs, other nations are striking deals, forging alliances, and creating new economic frameworks that don’t depend on Washington,” he said.
“Europe and Asia are strengthening ties. The UK is redefining its post-Brexit trade strategy. China is cementing its position as a dominant economic force despite US efforts to curb its influence. Global trade flows are adapting to a world with the US becoming no longer the dominant player it once was.”
Also Read: ServiceNow prez sees no US tariff threat to its India ops
