US Tariff Relief Gives India’s Electronics a Short Break, But New US Tariffs Could Hurt

Temporary Relief, Long-Term Questions

Over the weekend, India’s electronics sector received a temporary boost. Several key electronic items, including smartphones, laptops, and semiconductor parts, were spared from the reciprocal tariffs announced by the Trump administration. While this offers a short-term reprieve for exporters, industry voices warn that it may only delay deeper challenges.

Tech manufacturers like Tata Electronics, Foxconn India, and Pegatron India—along with global players such as Apple and Samsung—stand to benefit from the exemptions. These companies play a central role in India’s electronics export ecosystem, which recorded $29.12 billion in shipments for FY24, growing nearly 24% over the previous year. Smartphones alone contributed around 60%, with iPhone exports topping $17 billion. However, the celebration is cautious. The U.S. has signaled that special tariffs targeting semiconductors and electronics may follow soon, throwing India’s competitive advantage into doubt.

Trump’s Tariff Strategy : Mixed Signals for India

The U.S. administration has defended its decision to exempt items like smartphones and laptops, arguing that it protects global supply chains and minimizes consumer price hikes. But this exemption may be short-lived. Trump’s “nobody’s getting off the hook” remark, paired with comments from U.S. Commerce Secretary Howard Lutnick, points to incoming duties on semiconductors within the next few months.

Indian industry insiders are worried. Many fear the unpredictability of U.S. tariff policy could weaken India’s cost advantage, especially with competitors like Vietnam and Indonesia enjoying better trade agreements with the U.S. Sanjay Agarwal of Globe Capacitors points out that India lacks the preferential access that rivals have, despite producing a growing share of the world's consumer electronics.

PLI’s Role and the 90-Day Window

India’s Production-Linked Incentive (PLI) scheme has helped attract global tech giants and strengthen domestic manufacturing. But with the scheme set to expire in 2026 and uncertainty around new U.S. tariffs, manufacturers worry the advantages could erode quickly. For companies like Apple, rising costs and disrupted supply chains are potential threats.

The U.S. has offered a 90-day pause before implementing new tariffs. Industry players are using this time to lobby policymakers and push for stronger bilateral trade terms. Agarwal suggests that a structured trade framework, offering equitable market access and rational tariff structures, could provide Indian businesses the predictability they need to thrive.

A Silver Lining : China’s Tariff Burden Boosts India

While Trump’s tariffs could hurt India in some areas, they’re creating opportunities too. The U.S. has maintained stiff levies on imports from China, making Indian and Vietnamese goods about 20% cheaper in comparison, according to the India Cellular and Electronics Association (ICEA). ICEA’s Pankaj Mohindroo believes this will drive a shift in electronics manufacturing from China to other Asian countries, including India.

In fact, Chinese suppliers, facing higher export costs, are now offering Indian buyers discounts on components—helping local manufacturers cut input costs and improve margins by up to 3%. This increased price competitiveness is being welcomed by Indian exporters aiming to capture more market share in the U.S.

What Needs to Happen Next ?

Despite the short-term wins, experts caution that real success will depend on long-term strategic moves. Rajoo Goel from the Electronic Industries Association of India (ELCINA) urges the Indian government to accelerate talks with the U.S. for a broader trade agreement. He warns that without parity in global trade rules, India risks falling behind competitors who already enjoy favorable terms.

In the meantime, industry leaders are focusing on cost control, supply chain agility, and policy engagement. They see the current pause not as a solution, but as a chance to shape the next phase of trade relationships. Programs like the Electronics Component Manufacturing Scheme (ECMS) are helping reduce import dependence, but more is needed—especially in semiconductor production and backward integration.

Final Thoughts : A Critical Moment

India stands at a pivotal point in its electronics journey. The global reordering of supply chains presents a big opportunity—but one that comes with complex risks. If India can navigate the shifting trade environment, strengthen its agreements, and scale up domestic capabilities, it could emerge as a serious global contender.

But the clock is ticking. The next few months will determine whether the current advantage becomes a long-term gain—or just a temporary escape from uncertainty.