Kaynes Tech may shift production to US, Canada to ease tariff pressure
Bengaluru-based electronics manufacturer Kaynes Technology may shift some of its products in the US and Canada to mitigate the impact of American tariffs.
Speaking to TNIE, Jairam Sampath, Chief Financial Officer of Kaynes, said the company is dealing with the US tariff situation in two ways — first, by absorbing additional costs wherever possible, and second, by transferring part of its production to North America.
“We are analysing whether we can do the bulk of the work in India and then shift a portion of the production to our entities in the US and Canada,” he said, adding that not all categories of electronic goods currently attract tariffs.
“Some parts and components are tariff-free, but levies are imposed on finished goods. So, we manufacture most components in India and send them to our Canadian and US facilities for final assembly,” Sampath explained.
In August, the US administration granted temporary exemptions from the 50% reciprocal tariffs on certain Indian exports such as smartphones, routers, integrated circuits, and semiconductors.
Kaynes recently acquired August Electronics Inc. and Tranzmeo IT Solutions Pvt Ltd, both based in Canada, as well as Digicom Electronics, headquartered in the US. The Canadian acquisitions were completed in Q2 FY26, while Digicom was acquired in 2024.
The company has emerged as one of India’s leading contract electronics manufacturers, alongside peers such as Dixon Technologies and Amber Enterprises. It is also a beneficiary of the government’s incentive schemes for electronics and semiconductor manufacturing.
On October 28, the Union government approved four new electronic component units proposed by Kaynes, with a total investment of ₹3,280 crore. All four plants will be located in Tamil Nadu.
Sampath said India could soon evolve into a major manufacturing hub, driven by rising demand for electronic goods, capital subsidies from both central and state governments, and favourable geopolitical shifts.
“The Centre offers a 25% capital subsidy, while some states provide even higher incentives to attract industries and generate employment. In Tamil Nadu, we are investing nearly 50% of the total outlay,” he said.
He noted that while India’s economy is expanding rapidly, penetration of many electronic products remains low. “As our per capita income grows from $2,500 to $6,000 in the coming years, demand for electronic products will increase sharply,” he added.
Sampath also said changing global supply chains presents an opportunity for India. “Countries like Japan, Korea, and Germany are increasingly looking to India as a viable production base due to low wages and the availability of skilled talent,” he said, adding that “China has perfected the art of replication and now produces better goods than the originals.”
Explaining the company’s decision to set up its new facility in Thoothukudi, he said its proximity to the Vizhinjam deep-sea port was a major factor. “Currently, exports from India take about three weeks to reach the mother vessel in Colombo. With Vizhinjam, we can reach in one week — saving two weeks is a huge advantage in global trade,” he pointed out.
On the issue of rare earth metal scarcity, Sampath said it has not directly impacted Kaynes, as the semiconductor industry sources materials from around 70 countries. The shortage, he noted, has affected the automobile sector more significantly.
“China had been the primary supplier, but is now using rare earths as a strategic weapon. India, meanwhile, has begun investing through NMDC and Bharat Rare Earth Limited to secure supplies,” he said.