India's electronics exports may dominate trade negotiations with US

India's electronics exports, driving over 62% trade surplus, to dominate US talks

Electronic exports, which accounted for over 62 per cent of the increase in India’s trade surplus with the US between 2020-21 (FY21) and 2023-24 (FY24), as well as their growing share in overall exports to the country, are expected to be a focal point as India negotiates trade issues with the new US Trump administration, according to sources.

 

During this four-year period (FY21–FY24), India’s trade surplus with the US increased by $12.6 billion, from $22.7 billion in FY21 to $35.3 billion in FY24. Electronics exports in the same period increased by $7.9 billion, from $2.1 billion to $10 billion.

 

What is even more dramatic is the fact that smartphone exports, dominated by Apple Inc’s iPhones, account for 44 per cent of the increase in the electronics trade surplus between FY21 and FY24.

 

Electronics and iPhone exports to the US have come into prominence following the smartphone production-linked incentive (PLI) scheme. In FY21, when the PLI scheme was first announced, India’s exports to the US totalled $51.6 billion, with electronics constituting 4 per cent at $2.1 billion, which included smartphone exports of only $92 million. At this time, Apple had not yet begun producing or exporting iPhones from India. 

 

Fast forward to FY24, and India’s exports to the US have jumped to $77.5 billion — a 50 per cent increase. However, electronics exports during this period grew much faster, by over 370 per cent, reaching $10 billion.

 

Smartphone exports to the US, which were only $92 million in FY21, propelled almost entirely by iPhone exports, reached a staggering $5.6 billion in FY24.

 

At the end of the last financial year, electronics constituted 13 per cent of India’s total exports to the US, making it the country’s second-largest export category, behind engineering goods, which clocked $17 billion. Further, the iPhone was the single largest individual product export by Harmonized System category, accounting for nearly 7 per cent of total exports to the US. Although engineering goods are larger than electronics, they consist of small contributions from several categories, none of which stand out individually, unlike smartphones.

 

Apple produced $14 billion worth of iPhones in FY24, of which it exported $10 billion, with more than half going to the US. This year, its production could exceed $18 billion, with exports of $8 billion to the US.

 

It is clear, therefore, that electronics exports, particularly smartphones, will become a discussion point between Indian and US authorities, including Jamieson Greer, the newly appointed United States Trade Representative by the Trump administration, and the commerce ministry.