Tariff tempests swirl, yet India’s electronics throne stays polished. But with $20–30 billion in chip exports on the line, Washington’s next move could topple that...
Recently, when the White House Trade Adviser Peter Navarro crowned India the “maharaja of tariffs,” it was hardly meant as a compliment. Yet, in the world of electronics, that royal title has taken on a twist. Even as United States President Donald Trump doubles duties on Indian goods to a bruising 50 per cent, India’s electronics exports, particularly smartphones, remain seated comfortably on their throne, shielded (for now) from the worst of Washington’s tariff fire. However, industry leaders warn that the reprieve may be temporary.
On 7 August and again on 27 August, the US will double duties on a wide range of Indian exports to 50 per cent, citing “national security” concerns over New Delhi’s continued imports of Russian oil.
While most electronics, smartphones, computers, and semiconductors remain exempt under Executive Order 14257 and Section 232 of the US Trade Expansion Act, exporters fear that the exemptions could be revoked once the ongoing investigations conclude.
The Electronics and Computer Software Export Promotion Council (ESC) notes that India’s electronics and mobile phone exports have shown “remarkable resilience,” with a 47 per cent year-on-year rise to US$12.4 billion in Q1 FY26.
“Critical electronics items… continue to be exempted… preserving India’s momentum in global electronics trade,” the Council said in a 7 August statement. However, it cautioned that the tariff dispute underscores “the urgent need for India to diversify its export markets and reduce overdependence on traditional destinations.”
ESC has urged an expansion of the Department of Commerce’s Market Access Initiative to new high-potential regions, alongside stronger branding in emerging markets.
The background to the current trade rift is unusually sharp. Navarro had accused India of using US dollars earned from exports to buy Russian oil, which he claimed funds Russia’s military campaign in Ukraine.
“That math does not work,” Navarro told reporters, arguing the situation undermines both the US economy and national security. Homeland Security Adviser Stephen Miller added that India could ‘easily’ access oil from other markets.
Prime Minister Narendra Modi has defended the policy, declaring that India is “ready to pay a heavy price” to protect its farmers’ interests. The Ministry of External Affairs has condemned the US tariffs as “unjustified and unreasonable,” pledging to “take all necessary measures to safeguard national interests and economic security.”
From a geopolitical perspective, several international reports, including that of Al Jazeera, see the tariff escalation as the lowest point in US–India trade relations in years. It has complicated India’s careful balancing act between its long-standing ties with Russia, Indo-Pacific partnerships, and trade ambitions.
According to a report by The Economic Times, industry estimates warn that India’s electronics sector could lose US$20–30 billion in business opportunities over the next few years if US tariffs persist and are extended to semiconductors. The US has signalled an approximately 100 per cent chip tariff, with carve-outs for firms that commit to manufacturing in the US.
Bloomberg and Reuters report that large investors, such as Apple and Samsung, are likely to secure exemptions, thereby shielding their supply chains. Smaller non-smartphone exporters, however, lack such leverage and face greater exposure.
In FY25, India shipped US$14.6 billion in electronics to the US, with smartphones accounting for US$10.5 billion of this total. Non-smartphone categories: from inverters and chargers to transformer parts are more vulnerable to being displaced by lower-tariff competitors in Vietnam or Mexico.
Analysts in Goldman Sachs estimates the measures could shave up to 0.6 percentage points off GDP growth, while Japanese brokerage Nomura has likened the scale of the tariffs to a “trade embargo.” Electronics, textiles, and labour-intensive exports are among the most vulnerable sectors.
At a glance: US tariffs and Indian electronics
Currently exempt from the 50% tariff
- Smartphones
- Laptop and desktop computers
- Semiconductors and most integrated circuits
- Certain high-end telecom equipment
At risk if the Section 232 probe concludes against India
- Semiconductor components
- Consumer electronics accessories
- Industrial electronics
- IoT devices and wearables
Key figures
- India’s electronics exports to US FY25: US$14.6 billion
- Smartphones: ~US$10.5 billion
- Non-smartphone electronics: ~US$4.1 billion
- Q1 FY26 YoY growth: +47% (US$12.4 billion)
- US share of India’s exports: 18%
The electronics industry’s relative insulation is partly due to the US’s separate national security probe into certain technology imports. India recently overtook China and Vietnam to become the US’s top smartphone supplier with a 44 per cent share, and the current exemption preserves that advantage.
Yet, as Moody’s warns, the wide tariff gap with other Asia-Pacific nations could reverse recent investment gains if electronics are brought under the regime.
One of the most closely watched cases is Apple, whose suppliers are proceeding with plans to mass-produce the next iPhone in India. As per a report by Nikkei Asia, production is expected to begin within weeks, as the company anticipates that India-made devices will remain outside the 50 per cent tariff net.
Apple has invested heavily in shifting its supply chain to India and Southeast Asia amid US–China tensions, and in May reported that most iPhones sold in the US that quarter were made in India.
Trump has publicly criticised Apple for producing abroad, but recently softened his tone after Apple pledged US$100 billion in US investment and billions in domestic chip purchases.
Looking ahead, the future of India’s electronics exports depends on how Washington finalises its tariff schedules, particularly for semiconductors. The 100 per cent chip tariff has been floated, with exemptions for firms building in the US.
While this may shield large investors like Apple, Samsung, and TSMC, smaller Indian electronics exporters lack the same clout and face greater exposure.
ESC has called on policymakers to integrate targeted support for domestic value chain development, innovation, and IP creation into upcoming export and industrial strategies. “With new markets on the horizon, India’s electronics sector is not only poised to withstand global headwinds, but to chart new territory in the international arena,” the Council said.
Whether that optimism holds will depend on India’s ability to accelerate diversification, deepen indigenous capabilities, and maintain its foothold in a shifting global trade order.
Read more: India’s Electronics Exempt From US Tariffs Until Further Notice
