India is in a better position compared to its key competitors in the electronics export sector, particularly China, Vietnam, Thailand, and Indonesia, following the Trump administration’s tariff announcement, according to experts.
However, they advise the Indian government to continue negotiating with the US to lower tariffs and pursue a bilateral trade agreement. As per Donald Trump’s announcement on April 2, 2025, Vietnam, Thailand, Indonesia, and Malaysia face tariff rates of 46%, 36%, 32%, and 24%, respectively. In contrast, India’s reciprocal tariff rate stands at 27%.
In 2023-24, India exported $10 billion worth of electronics to the US. However, countries such as Saudi Arabia, the UAE, Brazil, and the Philippines have secured lower tariff rates, posing a threat to India’s electronics exports.
“Several developing countries have secured notably lower tariff rates compared to India, including Brazil, Turkey, Saudi Arabia, the UAE (each at 10%), and the Philippines (17%). Saudi Arabia and the UAE represent near-term threats to India’s electronics exports due to their SEZs, competitive manufacturing environments, and potential labor-cost advantages. Brazil’s favorable tariff treatment, despite historical trade barriers, adds to strategic ambiguity and warrants careful monitoring,” said Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association (ICEA). Ajay Srivastava, founder of GTRI, shares a similar viewpoint he said that in the electronics, telecom, and smartphone sectors, countries like Vietnam and Thailand are likely to lose cost competitiveness due to the steep US tariffs.
“As global brands seek to diversify supply chains away from high-tariff countries, India can emerge as a preferred destination for new manufacturing setups and component assembly lines,” said Srivastava.
Experts believe the US government’s decision will not impact smartphone exports to the US much. From April to February FY25, India’s smartphone exports surged to $21 billion, with the US contributing a 50-55% of the exports. This represents a 54% rise compared to the same period in FY24. Apple constitutes about 70% of the smartphone exports to the US, which jumped to $3.53 billion, up from $998 million during the same period last year.
“In the case of smartphones, supply chains are so seamlessly integrated and Asia dominated, it will be impractical for them to set up shop in the US overnight.. The biggest losers in this entire episode will be the American consumers because the costs of their products are going to go up significantly and the US is not going to bring local manufacturing anytime soon,” said Tarun Pathak, Research Director at Counterpoint. Faisal Kawoosa, founder of Techarc, sees two possibilities. He believes there could be an exception list where the Trump administration might relax tariffs for influential US companies like Apple, which could be adversely affected by the hikes.