The recent imposition of a 50% tariff by the United States on Indian imports, effective August 27th, has created significant challenges for Indian electronics manufacturers. Many companies are now shifting their focus towards expanding within India and identifying new markets overseas. Certain product categories, including smartphones, tablets, laptops, and select telecom equipment, are currently exempt from these tariffs.
Munoth Industries had secured a deal with Anker to supply 500,000 to 1,000,000 units monthly to the US market. However, if tariffs are expanded to include lithium cells, this business could be jeopardized. Jaswant Munoth, Chairman of Munoth Industries, emphasized the higher profit margins and stringent quality control standards associated with the US market, stating that losing this market would significantly impact their financial outlook.
Dixon Technologies, which previously planned to increase phone exports to the US by FY27, is now adopting a cautious stance. Sources reveal that Dixon is limited in its actions until the complete effects of the tariffs are clear, making government support difficult to obtain. Should tariffs be applied to mobile phones and semiconductor products in the third week of August, Dixon plans to seek government assistance.
The United States has excluded certain products from the tariffs, including smartphones, laptops, tablets, and particular telecom equipment, under 17-18 HS codes. These exports are valued at approximately $50 billion. However, other electronic goods, such as electric inverters, battery chargers, and transformer parts, are subject to the 50% tariff under 14 HS codes.
In light of these tariffs, Indian companies are actively exploring alternative markets to the US. The Chamber of Trade and Industry (CTI) has recommended investigating markets like Germany, the UK, Singapore, and Malaysia, considering the demand for engineering products in these regions. Additionally, advice includes reducing US imports and seeking global suppliers. India had aimed for $80 billion in electronics exports by 2030, yet the tariffs could result in losses of $20-30 billion. Companies investing in the US, like Apple and Samsung, may receive exemptions from these tariffs. Pankaj Mohindru, Chairman of the India Cellular and Electronics Association (ICEA), stated that they will collaborate with the government to overcome the tariff-related obstacles.
