Industry
Trump at helm to boost Indian electronics manufacturing as more tariffs on China imminent
Summary
- Companies wanting to avert the levies may find India most attractive as the government focuses on infrastructure investments and the ease of doing business
Donald Trump on his return as US president is expected to broaden tariffs against Chinese imports to cover phones and laptops, boosting the Indian electronics manufacturing sector, according to the domestic industry bodies.
It would be an opportunity for India to take the share away from China as companies wanting to avert the levies may find the country most attractive as the government focuses on infrastructure investments and the ease of doing business, senior executives said.
“Mr Trump in his election rallies and speeches has been talking about imposition of tariffs on our neighbours, which I am sure will make a lot of companies look for alternatives and India is the most attractive destination for electronic manufacturing," said Sunil Vachani, president of Consumer Electronics and Appliances Manufacturers Association and founder of Dixon Technologies, India's leading engineering manufacturing services provider. “Categories like lighting products, telecom and wearables offer a huge potential due to our large-scale, in-house R&D and high levels of localization."
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Tariffs on China an opportunity for India
Trump has proposed tariffs as high as 60% on Chinese imports and ending its most-favoured-nation trading status. In July 2018, during his first term, Trump has imposed tariffs ranging between 7.5% to 25% on 800 Chinese goods amounting to $34 billion in annual trade. The products excluded smartphones and laptops, among the largest electronics imports to the US.
“Over the years, India's relationship with USA has progressed on tech and various other strategic domains. In his first term, the two nations witnessed the strengthening of bilateral ties across critical fronts," said Pankaj Mohindroo, chairman of Indian Cellular and Electronics Association, which represents global smartphone and electronics players like Apple in India.
“In the changing geopolitical situations, the global electronics industry is witnessing a shift in supply chains, and India has all the potential to be its true and trusted partner," said Mohindroo. “We look forward to further strengthening this partnership for the benefit of both the nations."
A senior executive noted that Indian government must seize this high potential event and move swiftly to take advantage of the tariff changes, when they happen. “In the last round of tariffs by Trump in 2018, we were slow off the block and other countries like Vietnam and Mexico outdid us. We have time till our Budget to smoothen up issue like tariffs, interpretation issues, speed and ease of doing business, to make the most of this opportunity," he said, asking not to be named.
Turning point for India's electronics and manufacturing industry
Trump is reported to have said at a rally in Pennsylvania that he would levy a 25% tariff on goods from Mexico and would do the “same thing to China" for exporting fentanyl to Mexico. Additional tariffs would intensify the internal challenges being faced by the Chinese economy due to slowing consumption.
“This may be a turning point for India's electronics and manufacturing industry. With the possibility of increased tariffs on Chinese imports, India has a chance to become a leading alternative for global electronics manufacturing," says Bharath Desareddy, CEO of semiconductor design firm SmartSoC.
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“Our vast labor force, supportive government initiatives, and growing infrastructure uniquely position us to capture this opportunity," Desareddy said. “By acting swiftly, India can strengthen its place in the global supply chain and attract key investments. The future of electronics manufacturing is shifting, and India is prepared to rise to the occasion,"
Indian industry watchers added that several American companies have been looking to invest in India for the advantages that the nation offers as a destination for manufacturing because of the large domestic market and favourable government policies such as the production-linked incentive (PLI) scheme, which has resulted in massive growth in exports of electronic items. Indian export of electronic goods rose 19.74% annually to $15.64 billion in the first half of FY25, Mint reported last month.
