Team Siliconindia

• US Tariffs Threaten $20-30B in Indian Electronics Exports, with non-smartphone products like inverters, chargers, transformer parts, and IT hardware facing duties of up to 50%.
• Smartphones Exempt, Others Vulnerable: In FY25, $10.5B of India’s $14.6B US electronics exports were smartphones, leaving $4.1B in non-smartphone shipments highly exposed to tariff hikes.
• Wider Export Impact: Tariffs tied to India’s Russian oil imports also hit gems, jewellery, apparel, and other sectors, prompting some exporters to consider shifting production abroad.

India's electronics industry risks losing between $20 billion and $30 billion worth of business in the coming years as growing US tariffs pose the threat of destroying non-smartphone exports. The possible addition of semiconductors to this high-duty regime could further exacerbate the situation, as stated.

Whereas smartphones are likely to be exempted thanks to giants like Apple and Samsung having gotten exemptions in light of their investments in the US most other electronic exports are open. Goods such as electric inverters, battery chargers, transformer components, and IT hardware now attract tariffs of up to 50 percent.

During the financial year 2024-25, India shipped $14.6 billion of electronics to the US alone, of which $10.5 billion, or approximately 72 percent of the total, was in the form of smartphones. The remaining $4.1 billion in non-smartphone shipments is extremely susceptible to the new tariffs. The imposition of chip-specific tariffs, as scheduled, could further reduce the numbers.

The US is presently the destination for 38 percent of India's overall electronics exports worth $38.6 billion in FY25. This is trailed by UAE, Netherlands, and UK as important markets, while several of them also serve as re-export centers to the US, with a possible wider effect of the tariffs.

Also Read: India's Semiconductor Sector Gains Momentum with $21 Billion Project Pipeline

The US Customs and Border Protection agency's exemption list, published on April 5, applies only to specific categories such as smartphones, tablets, laptops, servers, and some telecom gear. The rest of the electronics are hit with a 50 percent tariff divided equally between a 25 percent reciprocal duty already imposed and another 25 percent secondary duty taking effect on August 27. The secondary tariff is meant to punish India's continued imports of Russian oil.

The electronics sector had targeted to achieve $80 billion worth of exports to the US by 2030, but that too now seems more distant, with tariffs undermining competitiveness across most non-smartphone segments. Other industries, such as gems and jewellery, apparels, machinery, furniture, prawn, and carpets, are being impacted as well. Exports of jewelery have already plummeted, with duties increasing from 31.5 percent to 55.5 percent from August 27 onwards.

Exporters of garments are considering shifting their plants to destinations such as Bangladesh, Indonesia, Vietnam, and Guatemala to help maintain US orders, highlighting the long-term destruction that could be done to India's overall export economy.