Electronics exporters eye new markets fearing Trump's tariff shocks

Economic Times

12-08-2025

ETtech As towering new tariffs reacquaint the world with lopsided levies last seen during the Great Depression nearly a century ago, local electronics companies are looking at alternative markets beyond the US – ironically, the primary revenue generator for the biggest Make-in-India success story.Europe, the Middle East and Africa are now featuring among alternative export destinations, sources said, while the US accounting for more than a third of industry shipments becomes a more difficult market, picketed by tariff guardrails and shifting content-origin goalposts.
"I have been reaching out to my customers proactively. They are still issuing orders, but there are concerns about how this will pan out.,' said Sanjay Agarwal, Managing Director, Globe Capacitors, which exports materials worth about Rs 100 crore annually to the US. 'I have already controlled my purchases, especially for the materials I buy only for US customers,' Agarwal said. 'As far as looking at alternative markets is considered, that is always on the horizon.'
Trade uncertainty has pushed exporters of a range of electronics beyond the dominant smartphones and assembled photovoltaic cells (PVC) modules to begin early discussions on ways to enter alternative markets, sources said. At the moment, most electronics exports, including smartphones, are exempt from the 25% tariffs imposed on India originally by US President Donald Trump, and the additional 25% set to go live from August 26. This is owing to an ongoing Section 232 investigation by the US Commerce Department as mandated under the Trade Expansion Act, 1962, the findings of which are set to be announced in the coming weeks.It is too early to assess the full impact of the trade changes being implemented by the US, but Indian firms with existing manufacturing footprint abroad may look to expand those operations, said Rajoo Goel, Secretary General, Electronic Industries Association of India (ELCINA).
Material impact
"About 75-80% of India's electronics exports are currently exempt from the additional 50% tariff regime. In the case of smartphones and IT products such as tablets as flat panel displays, which are exempt, India's value addition is relatively lower since we are primarily doing assembly,' Goel said. 'But for the remaining 25-30% products, such as PCB assemblies, telecom, consumer products, power electronics, which are subject to this new 50% tariff, our value addition is higher and would impact several domestic companies, including MSMEs."US-bound electronics exports jumped 43.5% to $15.89 billion in FY25. Smartphones made up 66% of this at $10.56 billion, and rose 89% in FY25."We are monitoring the situation closely and are looking at other markets for our products. For mobile phones, the Middle East and Africa are coming up as important destinations and for lighting, Europe is a market we are evaluating," said an executive at an electronic manufacturing service (EMS) firm.Assembled photovoltaic cells (PVC) modules were the second largest category, shrinking 32.7% to $1.81 billion in FY25, due to increasing restrictions on imported units. The rest was spread across electronic instruments ($1.4 billion), computer hardware ($154 million) such as laptops, and consumer electronics ($115 million) such as cameras."For the roughly $2 billion of electronics exports to the US, beyond smartphones and PVC, there are enough markets which exporters should explore, be it Europe, Australia or South East Asia. Given the geopolitical realignment that is happening, Russia should also be explored," Amrit Manwani, Chairman of electronic manufacturing services major Sahasra Group said. Echoing Goel, Manwani also said many firms may have to adapt and establish partial or full manufacturing in the US given its predominance as a market, if things don't ease. "Just as there has been talk of supply chain resilience, companies will now have to wake up to demand resilience. Companies will have to look at other markets like the Middle East, Europe, Latin America and Africa. It is an opportunity for Indian companies to go beyond the US and deepen their presence in other countries as well," another EMS executive said. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. As 50% US tariff looms, 6 key steps that can safeguard Indian economy
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