Context:
President Donald Trump, with the reciprocal tariffs, might bring an obstacle in India’s ambitions to achieve $500 billion in electronics production by 2030, with $200 billion worth of exports.
Key Highlights:
- The US is the largest market for India’s electronics export, with 33% of total exports made to the US in FY24.
- Electronics is the third largest export category for India, with exports of $22.54 billion during the period April November 2024, just behind engineering and petroleum products.
- The average tariffs set by the US on electronics imports are really much lower (very slightly over 1%) than the average tariff of 9% in India on 477 Harmonized System (HS) Code items.
- Almost 80% of US imports of electronics are free of import duty, and India on average charges 8% more tariffs.
Industry Reactions
- The industry associations are preparing a comprehensive analysis for the evaluation of the potential impact on the government.
- Policymakers will have to decide on a course of action to lessen possible export losses and maintain its competitiveness in international markets.
What’s on the Horizon?
- The government could engage in trade negotiations with the US or undertake changes in domestic policies to offset the tariff burden.
- To fulfill its audacious growth targets, the Indian electronics sector may need more diversified export markets and more local incentives.
