India may lose upto $30 bln electronics exports opportunity amid US tariffs

Time of India

17 hours ago

New Delhi: India's electronics industry faces a significant setback, with up to $20-30 billion in lost business opportunities in the coming years due to the heavy tariffs imposed by the US, and the likelihood of it being extended to semiconductors, said industry experts and company executives.
This is despite multinationals such as Apple and Samsung likely to get tariff-related exemptions, including
semiconductor tariffs
of 100%, as both companies--who have manufacturing operations in India--have announced plans to make major investments in the US.
'The latest developments will make India even more reliant on smartphone exports, while the rest of electronics may suffer, which in turn will hurt the entire ecosystem,' said an executive.
In FY25, India exported $14.6 billion worth of electronics to the US, with smartphones accounting for $10.5 billion or about 72%. The rest comprised non-smartphone items such as electric inverters, battery chargers, and transformer parts.
Overall, India exported $38.6 billion worth of electronics in FY25. The US was the leading export destination with a 38% share, followed by UAE at 9.6%, Netherlands at 7.4%, and UK at 4.8%. Countries like the UAE and the Netherlands also act as transit hubs for Indian
electronics exports
to the US.
As per a comparison of HS codes for products exported to the US, already nearly $4 billion worth of India's non-smartphone electronics exports to the US are exposed to the 50% tariffs. Rates on these and other products are set to go even higher due to the heavy tariffs announced on semiconductors.
Not all electronics exports are exempted from reciprocal tariffs. The April 5 exemption order by the US customs and border protection specifically lists products that don't fall under the reciprocal tariffs like smartphones, tablets, laptops, servers and certain telecom equipment.
The non-exempted electronics products have to pay 50% tariffs, of which 25% reciprocal tariffs have become effective, while the 25% secondary tariffs, specifically to penalise India for buying Russian oil, will come into effect from August 27.
The rates of semiconductor tariffs on such products will depend on the percentage of semiconductor content in them. Lenovo-owned Motorola, which has been ramping up smartphone exports to the US from India may also face semiconductor tariffs as the company has not firmed up plans to invest.
The industry had planned to reach $80 billion electronics exports to the US by 2030, but the target now looks unachievable as apart from smartphones, most of the products will draw huge tariffs, say industry executives.
'The incredible success story of electronics, particularly mobile phones, is the result of extraordinary industry and government partnership. We are cautiously optimistic that team India will be able to resolve the reciprocal tariffs,' said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), which counts the likes of Apple, Google, Motorola, Dell, Dixon, HP, and Vivo as its members.
The industry was targeting to enhance shipments of IT hardware, hearables and wearables, consumer electronics and components to the US given that an ecosystem has started to build in the country due to production linked incentives (PLI) schemes like that of smartphones, IT hardware and soon to commence components scheme.
As per ICEA, non-mobile electronics exports grew at a robust pace in the June quarter, touching an estimated $4.8 billion from $3.53 billion, an increase of 36%. These include key product segments such as solar modules, switching and routing apparatus, charger adapters and parts and components.