India Secures 20% Tariff Advantage Over China in U.S. Smartphone Exports

India has become a 20 percent tariff advantage seller of iPhone and smartphone to the US over China in a breakthrough for India’s electronics manufacturing sector. This comes after the U.S government exempted India from its currently imposed tariffs as a cheaper alternative of consumer electronics in the American market.​

It is expected to strengthen the strategic advantage and accelerate India’s rise as a global hub for electronics exports, mainly in the case of premium smartphones. Apple and other big players like Foxconn and Pegatron are moving their assembly operations to India and that is progressively making India less dependent on imports — a shift that increases their export potential.

The tariff differential, besides making India more price competitive, also makes India a more credible alternative to China for the global supply chains management as the word is looking more closely at the global supply chain spread in the context of the growing geopolitical tensions.

Tariff Exemptions Reshape Global Electronics Trade

The decision of U.S. administration to exempt some electronics from new reciprocal tariffs such as smartphones, laptops, tablets, and smartwatches jolted the people, as the new reciprocal tariffs strike fear in the minds of people and have altered the dynamics of global electronics trade. Yet, India and Vietnam benefit from no tariffs on these products against China in the US market. 

Referring to this advantage, Pankaj Mohindroo, Chairman of India Cellular and Electronics Association (ICEA), said that both India and Vietnam fall in the same boat of tariffs on the products and both also have 20 percent tariff advantage over China.

Surge in India’s Electronics Exports

During FY 24 25, the mobile phone export reached all time high of ₹2 lakh crore, a 55 percent rise from a year earlier, propelling India’s electronic exports into a quantum leap. This is significant because as much as ₹1.5 lakh crore out of total exports from this country was of iPhones alone.

This is mainly because global tech giants, Apple, Foxconn and Dixon, etc, have set up manufacturing facilities in India. This year, it put together $22 billion of iPhones in India — a 60% surge from 2018, marking up the production in India. 

Implications for Global Supply Chains

India’s strategic prominence as the region for electronics manufacturing is due to its tariff advantage, which attracts companies to diversify from their supply chains from China. Given the huge investment, interest and job creation in the electronics industry from the U.S. market where India has a positive tariff status, the sector stands to receive large amounts of financing.​

Also, it fits well into the ‘Make in India’ initiative by India, planning to increase its domestic manufacturing and decrease dependency on imports. Foreign investments in the electronics sector have been characterized by government histories of their supportive policies such as infrastructure development and tax incentives.​

Challenges and Future Outlook

However, this is not complete as there are advantages present. Indian infrastructure, bottlenecks, supply chain inefficiencies, and the need for skilled labor in India all need to be addressed so that the country can maintain its crucial position in the global electronics market. To take advantage of the changing landscape of global trade will be dependent upon continuous policy support and industry collaboration.​

As geopolitical tensions and trade policies keep changing, India’s sudden foray into building manufacturing capabilities and reaping the benefits of tariff takes a new shape to India’s path to becoming a key player in the global electronics supply chain.​