As Donald Trump revives his aggressive trade policies, India’s fast-growing electronics and semiconductor industries face a critical turning point. On March 5, Trump announced reciprocal tariffs on India and China, stating:

“Whatever they tariff us, other countries, we will tariff them. That’s reciprocal, back and forth.”

Trump has long criticized India’s trade policies, calling it a “tariff king” for its 15% duty on smartphone imports, which he claims hurts US companies like Apple trying to compete in India.

What’s at Stake for India’s Electronics Industry?

India’s electronics exports: $30 billion
Smartphones contribute: 60% (Apple iPhones account for two-thirds of this)

Potential Impact of US Tariffs:

• Increased cost of exports to the US, hitting Apple’s supply chain in India
• Reduced India’s attractiveness as a global electronics hub
• Possible relocation of manufacturing investments to other countries

Anurag Agrawal, CEO of Techaisle, warns:

“India’s position as an emerging global manufacturing hub faces imminent challenges and long-term disruptions. The smartphone sector stands to be the most significantly impacted.”

India’s smartphone boom has been fueled by the Production-Linked Incentive (PLI) scheme (2020–2026), offering 4–6% incentives for local manufacturing. But with the PLI scheme expiring in 2026, and new US tariffs looming, India’s cost advantage in smartphone production may shrink.

Could India Still Benefit from the US-China Trade War?

Some experts believe Trump’s tariffs could accelerate manufacturing shifts to India.

Lori Chang, Senior Analyst at Taiwan-based Isaiah Research, explains:

“Beyond the relocation of assembly plants from China, major component assembly—including camera modules and battery cells—has seen increasing investment in India to achieve a supply chain clustering effect.”

Apple is already expanding its production in India, adding:
iPhones
AirPods
iPad production (coming in 2025)

Challenges for India:

• Workforce training gaps
• Infrastructure bottlenecks
• Complex labor laws

If India fails to address these issues, rivals like Vietnam and Thailand could attract more investment instead.

Semiconductors: A Wake-Up Call for India?

India is not yet a major semiconductor exporter, but Trump’s proposed 25% tariff on semiconductor imports signals an urgent need for domestic chip production.

Ajai Chowdhry, Co-founder of HCL & EPIC Foundation Chairman, stresses:

“Having a robust domestic semiconductor market serves as a shock absorber, especially in turbulent geopolitical situations like this.”

He recommends:
India must prioritize manufacturing 15 key semiconductor chips to reduce import dependence.

Industry Leaders Urge Government Action

The India Cellular and Electronics Association (ICEA) is calling for urgent policy measures to prevent Trump’s tariffs from damaging India’s manufacturing growth.

ICEA Chairman Pankaj Mohindroo wrote to the Commerce Secretary:

“If we don’t address the reciprocal tariff challenges, it can severely impact our electronics manufacturing aspirations and lead to the shift of large Global Value Chains (GVCs) from India to other destinations.”

Proposed Solutions:

Negotiate lower tariffs with the US
Boost India’s domestic semiconductor production
Improve ease of doing business for global investors
Extend long-term incentives beyond PLI 2026

The Bigger Picture: Is Global Trade Moving Away from US Influence?

Nigel Green, CEO of deVere Group, notes:

“While the US plays political games with tariffs, other nations are striking deals, forging alliances, and creating economic frameworks that don’t depend on Washington.”

Shifting Trade Patterns:

• China, Europe, and post-Brexit UK are strengthening economic ties.
• US influence on global trade is weakening, while regional partnerships gain traction.

What’s Next for India?

With the PLI scheme ending in 2026 and Trump’s tariff threats growing, India must act fast to protect its competitive edge in electronics and semiconductors.

Key Priorities:

Strengthen trade negotiations with the US
Accelerate domestic semiconductor production
Enhance infrastructure and supply chain efficiency
Ensure long-term policy stability to retain global investments

India’s rise as a global electronics hub is at a critical juncture. The decisions made now will determine whether India thrives—or loses ground—to competitors like Vietnam and Thailand.