The recently imposed reciprocal tariffs by the United States have significantly disrupted the global trade equilibrium, especially in the electronics sector. As part of its evolving trade policy, the US government announced a 90-day tariff pause for all countries except China, intensifying the ongoing US-China trade war. In a sharp escalation, tariffs on Chinese electronics imports were raised to 145% after Beijing retaliated with new duties, while a 10% baseline tariff was retained for most other nations.
India, by contrast, maintained a relatively modest reciprocal tariff rate of 26%, significantly lower than Vietnam's 46% and Taiwan's 32%. Moreover, the US trade deficit with India, valued at $44.1 billion, is far less than its massive $283 billion deficit with China. This trade asymmetry positions India as a more favourable and less politically sensitive trade partner for the United States.
However, US Commerce Secretary Howard Lutnick said on 13 April that critical technology products and semiconductors from China would face "separate" new duties within the next two months. These would differ from the "reciprocal tariffs" announced by Donald Trump earlier, including the total 145% duties imposed on China last week.
Amid this shifting landscape, India is emerging as a preferred alternative for electronics manufacturing, with global giants like Apple and Samsung expanding their production footprint in India. Backed by a supportive policy environment and rising export competitiveness, India has a unique opportunity to strengthen its role in the global electronics supply chain.
This blog covers the impact of US tariffs on India's electronics industry, exploring how policy shifts, trade data, and industry dynamics are shaping new export opportunities. It also identifies key Indian companies positioned to benefit and provides strategic recommendations to help India capitalise on this critical moment.
Table of Contents:
India is quickly emerging as a viable alternative to China in electronics manufacturing, thanks to several national initiatives, such as the Production Linked Incentive (PLI) Schemes and the Make in India campaign.
1. Production Linked Incentive (PLI) Scheme for Electronics
The PLI scheme for electronics manufacturers offers 4–6% incentives on incremental sales. In FY 2023, ₹4,400 crore (~$530 million) was allocated to major global players, including Foxconn, Wistron (Tata), and Dixon Technologies—accelerating India's position in global electronics manufacturing.
2. 'Make in India' Boost to Domestic Electronics Production
The Make in India campaign has propelled electronics production from ₹1.9 lakh crore in 2014 to ₹9.52 lakh crore today. Notably, 99.2% of mobile phones sold in India are now manufactured domestically, and mobile exports rose from ₹1,566 crore in 2014–15 to ₹1.2 lakh crore recently.
3. Digital India's Role in Driving Electronics Demand
With over 650 million smartphone users and 950 million internet subscribers, Digital India is accelerating electronics demand across fintech, e-commerce, and IoT sectors—projected to contribute 20% to GDP by 2030.
Further strengthening its role in the global electronics ecosystem, India continues to attract marquee manufacturers. Foxconn, a key Apple supplier, is reportedly in talks to acquire 300 acres along the Yamuna Expressway in Greater Noida to establish its first facility in northern India.
This move not only reflects growing investor confidence in India's infrastructure and policy ecosystem but also signals a strategic decentralisation of supply chains from southern India to the north, enhancing logistical access to NCR and key trade routes.
India's electronics exports soared to $29.12 billion in FY 2023–24, reflecting a 23.6% Y-o-Y growth—a stark contrast to the 3% overall decline in total national exports.
1. Top Export Destinations for Indian Electronics
India's electronics exports are increasingly becoming global, with the United States leading as the top destination. Strong bilateral trade ties and rising demand for electronics, particularly mobile phones and semiconductors, have boosted India's presence in Western and Gulf markets.
Major Export Destinations in FY 2023–24:
- United States
- UAE
- Netherlands
- United Kingdom
- Italy
These countries collectively account for a major portion of India's electronics exports, with the United States leading the chart due to rising demand and tariff-related shifts. The strengthening of bilateral trade ties and India's competitive pricing under the PLI scheme have further boosted export volumes to these regions.
2. State-Wise Share of India's Electronics Exports (FY 2023–24)
India's electronics manufacturing ecosystem is geographically diverse, with several states emerging as dominant hubs of production and exports. These regions have benefited from industrial policies, infrastructure development, and foreign investments in electronics parks and special economic zones.
Export Contribution by Key States:
- Tamil Nadu: $9.56B (32.84% of total exports, +78% Y-o-Y growth)
- Karnataka: $4.6B (16%)
- Uttar Pradesh: $4.46B (15.32%)
- Maharashtra: $3B (10.62%)
Tamil Nadu continues to lead the way, driven by high-value mobile phone exports and robust manufacturing infrastructure. Karnataka and Uttar Pradesh follow closely, backed by strong policy support and the increasing presence of global manufacturers like Apple, Samsung, and Dixon Technologies. This regional distribution highlights the decentralised nature of India's electronics export growth.
3. Industry Composition of India's Electronics Exports
India's export portfolio in electronics reflects a growing maturity and diversification in its electronics manufacturing sector. While mobile phones remain the largest export category, industrial electronics and electronic components are gaining ground as India builds end-to-end capabilities.
Sector-Wise Breakdown:
The dominance of mobile phone exports is a direct result of local production ramp-ups under the Make in India and PLI schemes. Simultaneously, the increasing share of components and industrial electronics points to the rising depth and integration of India's electronics manufacturing ecosystem, enabling broader global competitiveness.
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India's evolving trade relationship with the United States has positioned it favourably within the broader framework of global trade negotiations, especially amid rising tensions from the US-China trade war. Unlike countries such as China and Vietnam, which have significantly high trade surpluses with the US, India's trade balance remains more moderate—making it a diplomatically viable partner.
As of 2023, India reported a trade surplus with the US of approximately $44.1 billion, far lower than:
This moderate trade surplus not only reduces political friction with the US but also increases India's leverage in bilateral trade talks. For the Indian electronics export sector, this creates opportunities to attract more foreign investment and become a preferred production hub amid shifting supply chains.
Trump's announcement of reciprocal tariffs on electronic goods could unintentionally accelerate India's emergence as a key global electronics hub. Here's a breakdown of how India stands to gain:
1. Enhanced Export Competitiveness
India's exports of electrical machinery and equipment surged by 63.09%, from $6.79 billion in FY23 to $11.08 billion in FY24. This growth demonstrates India's rising competitiveness in the global electronics supply chain, especially as it gains market share from China, which is facing 145% tariffs and separate tariffs for electronic products and Vietnam, which will face even higher US tariffs (up to 46%) after the tariff pause period ends, compared to India (around 26% under reciprocal tariffs).
Insight: The India Electronics and Semiconductor Association (IESA) has pointed out that even with short-term friction, India remains cost-competitive due to lower tariffs and government incentives.
2. Tariff Arbitrage Opportunity via PLI Scheme
India's Production Linked Incentive (PLI) Scheme, along with Make in India and Digital India, provides up to 6% incentive on incremental sales and helps offset tariff disadvantages. Moreover, Indian exports to the US face a lower effective tariff (around 26%) than many of its Asian peers.
Example: Apple and Samsung are already capitalising on these schemes. Apple, which makes 70% of its India-assembled iPhones for export, is expected to increase output as China's exports face steeper US tariffs.
3. Shift in Global Manufacturing Base
With Apple still producing ~80% of its products in China and Trump's tariffs raising the cost of Chinese exports, India emerges as a natural alternative. India offers:
- Lower labour costs
- Supportive policy framework
- Expanding digital and logistics infrastructure
Result: Companies like Samsung, Motorola (Lenovo), and Havells, which already export from India, may scale up shipments to the US, turning India into a larger global export base.
4. US Manufacturing Constraints Strengthen India's Case
Despite the tariff push, the US is unlikely to become a manufacturing powerhouse for consumer electronics because:
- Labour is expensive and scarce for 24/7 manufacturing
- The supply chains for smartphones and components are deeply rooted in Asia
- Setting up end-to-end production in the US would be costly and time-consuming
As stated by ICEA Chairman Pankaj Mohindroo:
“It will be very difficult for the US to pull off local manufacturing in the consumer electronics space... It's impractical to expect a rapid shift to the US.”
5. Strategic Bilateral Positioning
India’s $1.13 billion worth of electronic component imports from the US (5.04% of its total imports) means it is still dependent on US tech and equipment, but this also creates a mutual dependency, softening the blow of tariffs and enhancing India's leverage in negotiations.
Diplomatic Benefit: With a moderate trade surplus of $46 billion (far below China’s $295 billion), India is better positioned to negotiate bilateral deals, such as special tariff treatment or targeted component imports.
6. Rising Domestic Capabilities
India is building up its domestic supply chains with:
- 64 Apple assembly plants (Tata Electronics, Foxconn)
- Semiconductor ecosystem investments (Tata Elxsi, Micron, HFCL)
- Expansion of ancillary industries (e.g., component suppliers, logistics)
These investments help reduce import reliance and increase net exports, further strengthening India's global position.
The following table shows the export values of electronics category products to each of the leading export partner countries for the manufacturing country identified in the chart. The United States is a prominent destination for products in a wide variety of categories, indicating the Country's reliance on electronics imports from Asia, particularly from China.
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*Traded with the US via Hong Kong
The US's heavy reliance on China for electronics opens the door for India to become a primary export partner, especially in mobile phones, semiconductors, and industrial electronics.
These data points emphasise the strategic interdependence of the US on China's electronics exports. Nonetheless, the increased tariffs, geopolitical tensions, and Washington's desire to diversify its supply chains offer a strong opening for India to step in as an alternative supplier, particularly because of India's growing export base in electrical machinery and electronics, which grew by 63.09% from FY23 to FY24 ($6.79 billion to $11.08 billion).
India is rapidly gaining ground as a reliable alternative to China in global electronics manufacturing. With a 23.6% Y-o-Y rise in electronics exports and electrical machinery exports jumping 63.09% in FY 2023–24, Indian companies are well-placed to meet the rising demand from the US and EU.
Supportive policies like the PLI scheme (₹4,400 crore allocated in FY23) and global partnerships with brands like Apple, Samsung, and Motorola have further boosted their prospects.
Below is a sector-wise view of Indian companies most likely to benefit:
- Computers: Netweb Technologies, NELCO, and E2E Networks are well-positioned due to their focus on high-performance computing and enterprise servers, aligned with the global rise in AI and cloud demand.
- Telephones (Mobiles & Accessories): Dixon Technologies, Amber Enterprises, and Syrma SGS are already PLI beneficiaries. Dixon, for example, is a key assembler for Motorola and Samsung in India.
- Integrated Circuits: Kaynes Technologies and BEL are ramping up precision component manufacturing as India enhances its chip design capabilities. Dixon is also venturing into IC manufacturing under the semiconductor PLI.
- Broadcasting Equipment: Tejas Networks (acquired by Tata Sons) is expanding rapidly in the global telecom, supported by demand for 5G and fibre tech. Avantel and ITI Limited serve the defence and commercial broadcasting sectors.
- Electric Batteries: With the rise in EV adoption and portable power devices, companies like Exide, Amara Raja, and Waaree are scaling battery exports. Amara Raja has already announced large-scale lithium cell production units.
- Semiconductors: Tata Elxsi, HFCL, and Syrma SGS are part of India’s chip ecosystem roadmap. Tata's new semiconductor plant and design initiatives will reduce import reliance and drive exports.
- Air Conditioners: Voltas, Blue Star, and Amber Enterprises are global exporters of HVAC equipment, leveraging India’s low manufacturing cost and the booming infrastructure sector in export markets.
- Refrigerators: Companies like Ice Make, Blue Star, and Havells export commercial and domestic cooling solutions to the Middle East, Europe, and Africa.
- Video Displays: Dixon, Onida, and Videocon are diversifying their panel assembly capabilities, benefiting from the demand for smart TVs and digital signage.
- Electric Heaters: Electrotherm and Havells manufacture industrial and home heating appliances, gaining from seasonal and export demand, especially in Europe.
- Electric Motors: CG Power, ABB India, and Kirloskar Electric are increasing exports of industrial motors and EV components to European markets as green manufacturing gains traction.
- Vacuum Cleaners: Eureka Forbes, TTK Prestige, and Bajaj Electricals are established in the home appliance segment and are poised to grow exports to Africa, Southeast Asia, and the Middle East.
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It seems likely that these companies will benefit from:
- Opportunities for substitution of imports provided by supply chains shifting internationally.
- Government incentives, including the Production-Linked Incentive (PLI) scheme, which offers lower tariffs and financial support.
- Increased demand from U.S. and EU markets looking for avenues to source products outside of China.
- Strategic alliances with global brands, such as Apple, Samsung, or Motorola, are already using India as a sourcing base for products.
As the United States reevaluates its dependence on Chinese electronics imports, India stands at a strategic inflexion point in the global electronics supply chain. With a favourable tariff structure (~26% vs China's 145%), rapidly expanding production capacity, and proactive policies like the PLI scheme, India is uniquely positioned to emerge as a leading exporter of electronics.
Backed by a 23.6% Y-o-Y increase in electronics exports (FY24) and a 63.09% rise in electrical machinery shipments, India is already capturing global attention as a viable alternative to China and Vietnam.
However, to fully capitalise on this momentum, India must:
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Strengthen domestic electronics value chains for vertical integration
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Accelerate semiconductor manufacturing via large-scale fabs and R&D hubs
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Foster global trade partnerships with the US, EU, and Southeast Asia
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Pursue targeted bilateral agreements to ease component and tech imports
India's window of opportunity is here. With strategic execution, the country can redefine its role from a regional assembler to a global electronics manufacturing hub, reshaping the landscape of international trade.