US tariffs could threaten $30 billion in Indian electronics exports

Semiconductor duties, exclusion of non-smartphone items from exemptions likely to derail electronics $80 billion export targets

India’s electronics sector could lose an estimated $20–30 billion in business opportunities over the next few years, as rising tariffs imposed by the United States threaten to derail non-smartphone exports. According to a report by The Economic Times, the potential inclusion of semiconductors under the high-duty regime is expected to exacerbate the impact.

 

Smartphones may escape tariffs, rest may not

While smartphone giants such as Apple and Samsung may be granted tariff exemptions—owing to their announced investments in the US—most other electronics exports from India remain vulnerable. These include sectors like electric inverters, battery chargers, transformer parts, and IT hardware, all of which now face tariffs as high as 50 per cent.

 

In the financial year 2024–25 (FY25), India exported $14.6 billion worth of electronics to the US. Smartphones accounted for $10.5 billion, or approximately 72 per cent of that figure. The remaining $4.1 billion, made up of non-smartphone products, is largely exposed to the newly enforced duties, with further increases likely due to the planned semiconductor-specific tariffs.

 

US share in Indian electronics exports: 38 per cent

The United States remains India’s top export destination for electronics, accounting for 38 per cent of the country’s total electronics exports of $38.6 billion in FY25. The UAE followed with 9.6 per cent, the Netherlands with 7.4 per cent, and the UK with 4.8 per cent. Several of these countries also function as transit hubs for shipments ultimately destined for the US, amplifying the reach of these tariffs.

 

The US Customs and Border Protection agency’s exemption list, released on April 5, provides relief only for select categories such as smartphones, tablets, laptops, servers, and certain telecom equipment. All other electronic goods are subject to a 50 per cent tariff, split into 25 per cent reciprocal duties already in effect and an additional 25 per cent secondary tariff set to take effect on August 27. The secondary tariff is specifically intended to penalise India’s continued imports of Russian oil.

 

The industry had previously set an ambitious target of reaching $80 billion in electronics exports to the US by 2030. However, that goal now appears at risk, with high tariffs rendering most non-smartphone segments uncompetitive.

 

Electronics $80 bn export goal at risk

The electronics industry had set a target of reaching $80 billion in exports to the US by 2030. But with the new tariff structure rendering most non-smartphone goods uncompetitive, industry players fear a long-term derailment of that goal.

 

Gems, garments, machinery also hit

Electronics are not the only sector hit. The new tariff regime affects nine major export categories: gems and jewellery, garments, made-ups, organic chemicals, machinery, furniture, shrimp, and carpets.

 

The jewellery sector is already witnessing a sharp decline in shipments, with the effective duty now at 31.5 per cent and set to rise to 55.5 per cent post-August 27. Industry think tank Global Trade Research Initiative (GTRI) estimates exports in these categories could fall by 50–70 per cent.

 

Garment firms weigh relocation

Exporters like Pearl Global, which supplies to Gap and Kohl’s, say clients are demanding that suppliers absorb the cost or shift production to other countries. The firm is reportedly considering moving operations to Bangladesh, Indonesia, Vietnam, and Guatemala to retain US orders.

 

Cascading impact on India’s export economy

With US buyers pausing or redirecting orders, the new tariffs are expected to have a cascading effect on India’s broader export economy, endangering growth projections and job creation across critical sectors.