BTA discussions: India eyes a bigger share of the US electronics market

The electronics industry sees a big opportunity as the Indian government negotiates a bilateral trade agreement (BTA) with the US for enhancing exports to the country in key areas, including mobile devices, air-conditioners, colour TVs, wearables and audio, which have been dominated by China, Vietnam and Mexico. 

In 2023, the share of US electronics imports from India was a mere 1.9 per cent of the $520 billion they imported. The total Indian electronics exports to the US was pegged at only $10 billion. At another level, US total imports across all categories in 2023 was $3.1 trillion, and the share of India was just over 2.8 per cent. 

According to a presentation to the commerce ministry by India Cellular and Electronics Association (ICEA), India’s largest exports, based on Harmonised System (HS) codes, is smartphones led primarily by Apple Inc’s products. Despite that, its total share of US imports of smartphones in 2023 was 8.3 per cent. The US imported $60 billion in value of smartphones that year. However, Vietnam is bigger than India, with the US importing over $8 billion from that country. The US imported smartphones worth $45 billion from China, which dominates the sweepstakes with a mindboggling 75 per cent share. 

ICEA executives say that with a 20 per cent duty imposed on smartphones by the US recently, India will have a tariff advantage (Indian tariff is 16.5 per cent). The association is pushing for allowing smartphone imports as part of the bilateral agreement at zero per cent as there are hardly any US manufacturers of phones. Similarly, the 25 per cent duty imposed on Mexico, which was earlier under a free trade agreement (FTA), again provides an opportunity for India. 

That is reflected in the fact that in many other areas of electronics, India has been an insignificant player. For instance, in switching and routing systems, US imported over $51 billion in 2023, with Vietnam accounting for a fifth of the US imports followed by Mexico and China. 

In desktops and servers, colour TVs, and air-conditioners, Mexico has reigned supreme by virtue of the FTA. For instance, it accounted for 67 per cent of total US imports of desktops and servers, 76 per cent of colour TVs, and 48 per cent of refrigerators. India in all these segments was an insignificant player. But now with the imposition of a 25 per cent duty on Mexico, it provides opportunity for India, provided it reduces or scraps its tariffs on products like colour TVs and air-conditioners. 

China also dominates in two other areas — laptops & tablets, and wearables & hearables. The country accounted for 77 per cent of US imports of laptops & tablets, and 43 per cent of wearables & hearables imports in 2023.