US SC ruling on Trump's tariffs: A China worry for India's iPhone exports

Apple Inc’s big push to exports of iPhones to the United States (US) from India may be affected because the country loses the advantage of a 10 per cent tariff differential vis-a-vis China due to fentanyl tax (targeted tariffs) on the export of mobile phones on the East Asian country.

 

The tax now has been declared “illegal” by the US Supreme Court.

 

With duty on mobile phones for both the countries now equalised at zero, Apple Inc, experts say, will find it more cost-effective to export from China rather than India, which has a higher cost of production than China.

 

This in turn could impact the surging growth of exports of iPhones from India.

 

India had a cost disability of 10-14 per cent vis-a-vis China in assembling smartphones in the country. However, with the production-linked incentive (PLI) this handicap was reduced due to the 4-6 per cent incentive provided under the scheme by the government. 

 

With the US imposing a 20 per cent fentanyl tax (fentanyl is an opioid drug) on China last year, the cost difference was not only neutralised but India became an attractive and cost-effective destination for exporting iPhones to the US.

 

However, the advantage for India was narrowed but not neutralised. Last November fentanyl duty was brought down to 10 per cent after the US and China reduced punishing tariffs against each other.

 

Fentanyl duty was imposed on China and a few other countries across products to pressure them to take action on it. Taking advantage of high duty in China, Apple Inc pushed the pedal on exports from India last year, which is reflected in the fact that exports of smartphones, mainly iPhones, went up by 200 per cent between April and November, hitting $12.54 billion.

 

Smartphone exports accounted for over one-fifth of exports to the US in this period and the huge increase not only made up for the fall in exports in many key commodities but ensured that overall shipments from India did not fall but grew despite the imposition of a 50 per cent penal duty across broad swathes of commodities as retaliation for buying Russian oil.

 

The surge in exports to the US has helped in pushing overall smartphone shipments globally from India, which hit $30 billion in 2025 with Apple Inc accounting for a 75 per cent share. 

 

Experts say that Apple Inc has two options – shift exports from India to China and send phones from India to its other markets, or push for the continuance of the PLI scheme, which ends in March 2026 so that India's disability in cost vis-a-vis China is taken care of.