Impact of US Tariffs on Indian Electronics Industry

New Delhi: Indian electronics industry has around two weeks breather from the proposed tariffs due to the pending review of a key section that covers technologies under the ongoing bilateral negotiations, industry and government sources said.

US President Donald Trump on Wednesday announced the imposition of a 25% tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying military equipment and crude oil from Russia.

“Section 232 which covers electronics and technology products is expected to come up for review after two weeks. When the US had imposed basic 10% duty then also technology products were exempted due to pending review of section 232. This is the position as of now. We don’t know what will (happen) after two weeks,” a government source said.

It was, however, not clear if the 25% duty will be imposed in addition to the existing 10% baseline tariff. The 10% tariff, which currently applies to most Indian goods barring a few, was announced by Trump on all countries on April 2.

Also, the exact quantum of the penalty is unclear.

Smartphones, especially the iPhone, are the biggest component of electronics exports from India to the US.

Trump has been openly calling out Apple to stop expanding iPhone production in India.

The tariff of 25% announced by Trump is expected to hit Apple’s plans to expand iPhone manufacturing in India as well as export of other electronics to the US, according to analysts.

“Today’s sudden announcement of 25% tariffs on exports from India to US will certainly hit Apple’s plan of making India as a large export hub for iPhone exports to US,” IDC India, South Asia & ANZ, Associate vice president for devices research, Navkendar Singh said.

He said the US makes up around 25% of iPhone shipments for Apple, which is around 60 million per annum.

“To meet the iPhone demand in the US from iPhone assembled in India requires significant manufacturing expansion in India, which will be directly impacted by these new tariffs,” Singh said.

According to multiple sources, Apple plans to increase iPhone production to 60 million units this year, from about 35-40 million units that it produced in 2024-25.

Apple CEO Tim Cook, during the second-quarter earnings call had announced that all iPhones sold in the US in the June quarter will be shipped from India. India-made iPhones are assembled in Taiwanese contract manufacturer Foxconn’s factory in Tamil Nadu.

“For Apple, near-term challenges include higher costs on India-assembled iPhones exported to the US, potentially dampening demand and prompting recalibration of its supply chain. While some long-term shifts toward US-based production are in motion, India will remain a critical lynchpin in Apple’s global strategy,” CyberMedia Research, Industry Research Group (IRG), Vice President (VP), Prabhu Ram said.

The blow from the US comes at a time when Indian electronics production is reeling under pressure due to restrictions being imposed by China on supply of several critical components, capital goods and even skilled technology professionals.

Elcina, Secretary General, Rajoo Goel said that China’s hostile steps can impact the supply side and increase costs as production will be impacted, at least in the short-term till alternatives are developed “Increase in tariffs by the US will affect exports, shrinking demand. Both these steps could result in slowing down growth,” Goel said.