Several electronics makers are reconsidering local expansion and scouting alternative overseas markets as the latest US tariffs negate India’s earlier pricing edge over China, although key items – such as smartphones, tablets and laptops – remain exempted from the 50% levies announced so far.
Munoth Industries, which makes lithium-ion cells for power banks in India, had inked a definitive agreement in January with US-based Anker to supply cells for power banks to be sold in the US. Munoth had earmarked a fourth of its capacity to supply 500,000-1 million cells a month to the US.
“Currently, lithium cells are exempted from tariffs, but if Donald Trump puts tariffs on them, our US business may very well move out to other companies,” Jaswant Munoth, vice chairman, Munoth Industries, told ET.
Munoth said the US business offered a higher margin, almost double that at home, besides higher quality controls.
“Losing the US would be a big loss for our financial projections, even if capacity remains utilised for domestic supply. Future revenue will surely come under question,” he said.
The US administration has levied a total of 50% (25%+25%) tariffs on imports from India.
To be sure, smartphones, laptops, tablets, servers, certain telecom equipment, integrated circuits, and flat panel display modules are among 17-18 HS codes exempted from the current tariffs. Industry estimates suggest exports of these items could be worth about $50 billion.
But all other electronics products, including electric inverters, battery chargers, parts of transformers, etc., are among the 14 HS codes facing 50% tariffs.
‘Wait & watch’
Meanwhile, leading local contract manufacturer Dixon Technologies, which had earlier said it expects a surge in mobile phone exports to the US by FY27 for its customer Motorola, is now in a wait-and-watch mode, a person familiar with the developments told ET.
“Currently, there is nothing Dixon can do, honestly, but to wait,” said the person cited above. “Nobody has an answer to this problem and companies cannot approach the government for help unless the tariff situation is definitively defined.”
The person added, however, that once the US government announces its tariffs on mobile phones and other semiconductor-based products — likely by the third week of August — they will go to the government for assistance.
Executives at the Motherson group, which recently entered Apple’s supply chain via a joint-venture with Hong-Kong based BIEL Crystal Manufactory, heaved a sigh of relief after they learnt that the additional $100 billion investment by Apple’s partners in the US would not take away Motherson’s orders.
“Apple’s supplier Corning will be making the cover glasses for iPhones and Apple Watches in the US going forward. We do the machining on the glass to fit the dimensions of the product. That part of manufacturing is not affected,” an executive aware of the developments told ET.
Beyond the US
Other contract manufacturers, such as Amber Enterprises, said they are holding back on exports for now, and may target other regions in future.
“The tariff action that is happening has obviously changed the outlook for the industry. Companies with significant export aspirations would be worried at this point due to the current geopolitical situations and tariffs,” said Jasbir Singh, chairperson, Amber Enterprises.
Singh said manufacturing would be needed in India with or without tariff arbitrage due to the massive domestic consumption.
“The primary appeal for large multinational companies to come to India is its huge consumption potential, which is expected to continue for the next 15-20 years,” Singh said. “Exports will be a bonus on top of the domestic market.”
But industry associations, which represent the top manufacturer and electronics brands in India, remain concerned.
“About 80% of our electronics export to the US is mobile phones-related, primarily fueled by Apple. They may not have to face the tariff impact after setting up manufacturing in the US,” said Ashok Chandak, president, India Electronics and Semiconductor Association (IESA). “But other electronic products, such as medical electronics, telecom equipment, and industrial products would get significantly impacted by the duty. Optic fiber cables are also expected to attract tariffs.”
Chandak said a key strategy among electronics companies involves looking for alternative markets and recalibrating export plans beyond the US. This could include Asia, Europe, and even Russia.
“The overall picture is not going to be positive even after the semiconductor tariffs are announced. It will be a troublesome scenario for our sector,” he said.
The India Cellular and Electronics Association (ICEA) has projected electronics exports to touch $46-50 billion by the end of the current fiscal, from $12.4 billion in the June quarter.
“The export projections do not take into account the impending sector-specific tariffs on semiconductor goods imports into the US. That said, India is unlikely to be specifically impacted with the semiconductor tariffs because imports from every other country will face the same tariffs,” said Pankaj Mohindroo, chairman, ICEA.
Munoth Industries, which makes lithium-ion cells for power banks in India, had inked a definitive agreement in January with US-based Anker to supply cells for power banks to be sold in the US. Munoth had earmarked a fourth of its capacity to supply 500,000-1 million cells a month to the US.
“Currently, lithium cells are exempted from tariffs, but if Donald Trump puts tariffs on them, our US business may very well move out to other companies,” Jaswant Munoth, vice chairman, Munoth Industries, told ET.
Munoth said the US business offered a higher margin, almost double that at home, besides higher quality controls.
“Losing the US would be a big loss for our financial projections, even if capacity remains utilised for domestic supply. Future revenue will surely come under question,” he said.
The US administration has levied a total of 50% (25%+25%) tariffs on imports from India.
To be sure, smartphones, laptops, tablets, servers, certain telecom equipment, integrated circuits, and flat panel display modules are among 17-18 HS codes exempted from the current tariffs. Industry estimates suggest exports of these items could be worth about $50 billion.
But all other electronics products, including electric inverters, battery chargers, parts of transformers, etc., are among the 14 HS codes facing 50% tariffs.
‘Wait & watch’
Meanwhile, leading local contract manufacturer Dixon Technologies, which had earlier said it expects a surge in mobile phone exports to the US by FY27 for its customer Motorola, is now in a wait-and-watch mode, a person familiar with the developments told ET.
“Currently, there is nothing Dixon can do, honestly, but to wait,” said the person cited above. “Nobody has an answer to this problem and companies cannot approach the government for help unless the tariff situation is definitively defined.”
The person added, however, that once the US government announces its tariffs on mobile phones and other semiconductor-based products — likely by the third week of August — they will go to the government for assistance.
Executives at the Motherson group, which recently entered Apple’s supply chain via a joint-venture with Hong-Kong based BIEL Crystal Manufactory, heaved a sigh of relief after they learnt that the additional $100 billion investment by Apple’s partners in the US would not take away Motherson’s orders.
“Apple’s supplier Corning will be making the cover glasses for iPhones and Apple Watches in the US going forward. We do the machining on the glass to fit the dimensions of the product. That part of manufacturing is not affected,” an executive aware of the developments told ET.
Beyond the US
Other contract manufacturers, such as Amber Enterprises, said they are holding back on exports for now, and may target other regions in future.
“The tariff action that is happening has obviously changed the outlook for the industry. Companies with significant export aspirations would be worried at this point due to the current geopolitical situations and tariffs,” said Jasbir Singh, chairperson, Amber Enterprises.
Singh said manufacturing would be needed in India with or without tariff arbitrage due to the massive domestic consumption.
“The primary appeal for large multinational companies to come to India is its huge consumption potential, which is expected to continue for the next 15-20 years,” Singh said. “Exports will be a bonus on top of the domestic market.”
But industry associations, which represent the top manufacturer and electronics brands in India, remain concerned.
“About 80% of our electronics export to the US is mobile phones-related, primarily fueled by Apple. They may not have to face the tariff impact after setting up manufacturing in the US,” said Ashok Chandak, president, India Electronics and Semiconductor Association (IESA). “But other electronic products, such as medical electronics, telecom equipment, and industrial products would get significantly impacted by the duty. Optic fiber cables are also expected to attract tariffs.”
Chandak said a key strategy among electronics companies involves looking for alternative markets and recalibrating export plans beyond the US. This could include Asia, Europe, and even Russia.
“The overall picture is not going to be positive even after the semiconductor tariffs are announced. It will be a troublesome scenario for our sector,” he said.
The India Cellular and Electronics Association (ICEA) has projected electronics exports to touch $46-50 billion by the end of the current fiscal, from $12.4 billion in the June quarter.
“The export projections do not take into account the impending sector-specific tariffs on semiconductor goods imports into the US. That said, India is unlikely to be specifically impacted with the semiconductor tariffs because imports from every other country will face the same tariffs,” said Pankaj Mohindroo, chairman, ICEA.
