India's telecom exports to gain competitive advantage from US trade deal

Reciprocal tariffs cut to 18% under the India-US trade deal are expected to improve margins and competitiveness for Indian telecom equipment and optic fibre makers

India’s telecom equipment exports are set to get an edge over competing countries including China, Mexico, Vietnam and Malaysia, following the trade deal between India and the US which lowered the tariff from 50 per cent to 18 per cent, effective immediately.  

 

“As a result of the reciprocal tariff rate being reduced to 18%, exports of telecom products such as ISDN terminals, ISDN terminal adapters, X.25 PADs, and set-top boxes, as well as aerial reflectors, will be competitive relative to key competing manufacturing nations,” Pankaj Mohindroo, chairman of India Cellular and Electronics Association told Business Standard. 

 

"The deal strengthens India’s position as a cost-competitive and relatively lower-risk sourcing destination, especially as US buyers continue to diversify supply chains amid geopolitical uncertainty," said Siddhant Cally, research analyst at Counterpoint Research. 

Switching and routing apparatus, including modems, PLCC equipment, voice-frequency telegraphy systems, DLC, multiplexers, and SDH equipment et al had been under the 50 per cent tariff levy since October last year.

 

Industry executives said that move would also lower costs for imports of optic fiber, cables, set top boxes among other telecom equipment, thus opening up the US market further which is aggressively building AI infrastructure and data centers. 

 

“It opens up the environment for everybody and improves the situation for all Indian manufacturers, particularly for telecom equipment, the tariff was 50%, so if and when it comes down to 18%, it is a substantial advantage to all telecom equipment manufacturers,” said Mahendra Nahata, managing director of HFCL Limited in its earnings call on Tuesday. 

 

Nahata added that the company, which gets 27 per cent of its revenues from exports, had faced revenue shortfalls in the December quarter as its shipments to the US getting stuck at customs due to ambiguity on tariff which also led to the  company paying up for damages at ports. 

 

Experts added that the in the near term, the India–US trade deal reduces tariff-led cost pressures and execution risk for Indian telecom equipment and optical fibre exporters, particularly for suppliers that had already secured US orders but were facing margin or delivery pressure due to elevated costs. 

 

US tariffs impacted margins for optic fiber cables maker Sterlite Technologies Ltd, by about 760 basis points to 10.3 per cent as of December quarter 2025, which had to pass on some proportion of tariff cost to customers and aggressively ramp up local production in its American facility. Managing director Ankit Agarwal said that the trade deal would provide a clear path for further margin expansion. “This is a very positive development,” he told Business Standard. 

 

Stocks of major telecom equipment and optic fiber cable makers were up on Tuesday, following the announcement of the trade deal. HFCL rose 2.85 per cent to Rs 68.27 and STL was up 13.23 per cent to Rs 124.55 on BSE. 

 

"Tariff relief alone is not a complete solution. Margin recovery will be gradual, and for many companies, hybrid models where core manufacturing remains in India with final assembly or customisation in the US are likely to make more strategic and economic sense than full-scale localisation," Cally added.