Advantage India in electronics as Donald Trump pauses tariff, hints at exemptions

Though 10% tariffs remain applicable, the Wednesday announcement has given India room to pursue trade negotiations with the US, which industry stakeholders believe can help smartphone makers such as Apple Inc. continue to use India as a key manufacturing destination.

It's important for India to retain Apple's manufacturing. As of 2024, Apple exported over $10 billion worth of iPhones from India to its global markets, including the US, according to three industry analysts Mint spoke with. 

Earlier this week, Union electronics and information technology minister Ashwini Vaishnaw pegged Apple’s iPhone exports from India even higher at $17 billion. On 8 April, the ministry of electronics and information technology (Meity) notified a scheme to incentivize manufacturing of electronics components in India, offering up to 10% in incentives to component manufacturers—adding up to $2.7 billion over six years. India's total electronics exports stood at $23 billion in 2024, according to Vaishnaw.

Also Read: India’s annual electronics exports expected to double to $50 billion by 2030

Homegrown Tata Electronics Pvt. Ltd and Taiwanese company Foxconn’s India joint venture Bharat FIH Ltd are key suppliers to Apple. Other electronics manufacturing services (EMS) firms that export to the US, as per reports on the EMS sector by Morgan Stanley and Macquarie, include India’s largest contract manufacturer Dixon Technologies (India) Ltd, Syrma SGS Technology Ltd, and Kaynes Technology India Ltd.

The silver lining

Now, amid a pause in Trump’s imposition of total reciprocal tariffs of 27% on India, experts see a silver lining: India can continue pursuing a bigger role in the global electronics supply chain. 

On Thursday, Mint reported that India is targeting exports of over $50 billion in smartphones by 2030—a goal in which Apple will play a pivotal role since the iPhone maker alone accounts for over 60% of the country’s smartphone exports to the world.

Ashok Chandak, president of industry body India Electronics and Semiconductor Association (IESA), said while Trump’s tariff pause is “a tactical recalibration rather than a fundamental policy shift", the move offers a “strong opportunity driven by India’s push to establish a holistic ecosystem of electronics assembly firms, component and semiconductor manufacturing".

“At a premier level, both Trump and India’s Prime Minister Narendra Modi have expressed willingness to increase trade. While a big company like Apple would want to diversify its supply chain as much as possible, the 90-day pause is a welcome move as it offers both India and the US to assess the situation and address price hike concerns. Overall, this leaves India’s electronics ecosystem at a strong spot for the time being," he added.

Meanwhile, the ministry of commerce is working on negotiations with the US government to increase trade between the two nations, according to two people aware of the matter. While industry stakeholders have been called to offer comments on key challenges and India’s needs, talks of a potential bilateral trade treaty remain a work in progress.

Also Read: Centre mulls maximising electronics earnings amid uncertainty over Apple exports, tariff haze

On Wednesday, Trump, too, acknowledged that India is in talks with the US for better trade relations. His comments on handling US companies have also offered a respite, which showed in the same-day performance of US markets and indices.

Trump said at a press conference that he would “take a look" at the idea of exempting certain US companies from the impact of his import tax duties from nations around the world, including India. “I’ll take a look at it as time goes by. There are some (companies) that by the nature of their business will get hit a little bit harder, and we’ll take a look at that," Trump said. When asked if there would be a criteria for such exemptions, he said, “Just instinctively."

The comments have boosted Apple’s shares in the US, which had declined by 23% since Trump’s 2 April tariff announcements. In Wednesday’s trading hours, Apple’s share surged 15% in a single day, recovering a significant part of its decline over the past week.

For Apple in India, this could mean not disrupting its plan to make a quarter, or over 60 million of its iPhones in the country by 2028. Coupled with a push to generate greater domestic value from electronics manufacturing in India, this could offer a major boost to India’s electronics sector in the long run.

On edge

Caution, however, remains in the market. Navkendar Singh, associate vice-president at market researcher IDC India, said “the abject uncertainty under Trump’s administration is India’s biggest concern", even though there may be near-term benefits for India with the tariff pause.

Also Read: Why India’s electronics sector is least at risk from Trump's reciprocal tariff scrutiny

“Even if Trump decides to pull back on tariffs, he may decide the very next day to increase tariffs drastically if he feels unhappy with anything related to India, or any other nation for that matter. It is this uncertainty that will continue to keep Apple and India’s electronics industry on the edge, and things are unlikely to change right away," Singh said.