Potential Growth of India’s Electronics Exports Amid Trump Tariffs
The Trump’s tariff initiative could enhance India’s electronics exports. The country has lowered import duties, especially on mobile components, and may reduce them further in response. Currently, India holds a modest share of U.S. electronic imports, primarily smartphones. Companies like Samsung and Apple are increasing production in India, suggesting growth potential in the sector.
The Trump administration’s implementation of reciprocal tariffs on Indian goods may significantly bolster India’s electronics exports, according to a report from Nomura. India has been actively reducing import duties in recent years and has made strides in its 2025-26 Union Budget by rationalizing import duties on essential components for mobile phones and television panels. Nomura suggests that if India responds to tariff threats by potentially eliminating import duties, it might enhance its advantage in smartphone exports while limiting assembly shifts to the United States.
In terms of the present trade landscape, fully assembled mobile phones incur a 15% duty in India, with wearables and televisions facing a 20% duty. Contrastingly, the U.S. imposes no import duties on these items. Notably, many components entering India, such as PCBAs and displays, enjoy 0% duty, contributing to a low weighted effective import rate of about 3-4%. Furthermore, data indicates significant growth in India’s electronics exports to the U.S., rising from approximately $2.5 billion in FY20 to around $11 billion in FY24, with smartphones accounting for a major portion of this increase.
India’s potential benefits from electronics exports are evident, particularly as it continues to lower import taxes. Under reciprocal tariffs, the U.S. could apply proportional tariffs on similar products or a weighted average across multiple commodities, generally resulting in minimal impact since India’s current tariffs are already low. If India were to eliminate import duties completely for mobile phones, the shift of smartphone assembly to the U.S. would be limited due to lower value addition, higher labor costs in the U.S., and a favorable exchange rate for Indian manufacturers.
With India’s current share of U.S. smartphone imports reaching 10% while overreliance on China persists, there exists a competitive advantage for India, particularly with anticipated tariffs on products from China and Mexico. Thus, Nomura believes that India’s competitiveness in exports will likely grow, leading to a sustained increase in smartphone exports if tariffs are consistently enforced.
Key Indian industry leaders are capitalizing on these opportunities, with major companies like Samsung and Apple sourcing 23% and 15% of their global production from India, respectively. Nomura forecasts that India’s smartphone exports could reach around $20 billion in FY25 and might rise to $70 billion by FY30 if global sourcing trends shift significantly to India. Companies such as Dixon and SAMIL are anticipated to be the primary beneficiaries of this growth, particularly through mobile exports and display components.
In summary, India’s electronics export sector stands to benefit considerably from the imposition of tariffs by the Trump administration. The country is ideally positioned to enhance its market share in smartphone exports, responding proactively to tariff threats. Ongoing reductions in import duties, coupled with the advantages of lower labor costs and a favorable trade environment, may lead to a substantial increase in exports. With major companies already increasing their production in India, the outlook for Indian electronics exports appears promising for the coming years.
Original Source: www.financialexpress.com
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