US tariffs: India’s tech hardware sector likely to gain over
US tariffs: India’s tech hardware sector likely to gain over China, Vietnam
With China facing a 34 per cent US tariff and Vietnam 46 per cent, India's relatively lower tariff of 27 per cent may shift supply chain dynamics, helping the domestic tech hardware sector grow further
NEW DELHI — With China facing a 34 per cent US tariff and Vietnam 46 per cent,
India's relatively lower tariff of 27 per cent may shift supply chain dynamics,
helping the domestic tech hardware sector grow further, according to a new
report.
India’s electronics manufacturing, especially smartphones,
are set to gain a competitive edge as the US imposes tariffs on electronics
imports from key countries, says a CLSA report.
The shift in the global supply chain could favour India,
particularly in the smartphone manufacturing segment, it added.
Smartphones account for $51 billion worth of imports for the
US, with China, Vietnam and India being key sources, according to the global
broakrage.
Apple and Samsung already have robust manufacturing
operations in India.
India's lower tariff, combined with its large domestic
market and increasing backward integration supported by the production-linked
incentive (PLI) scheme, enhances its cost competitiveness.
Dixon Technologies is likely to be a key beneficiary of this
shift in the global supply chain dynamics.
While Apple and Samsung's assembly operations are either
in-house or with companies not listed in India, Dixon's role in the supply
chain is expected to grow, said CLSA.
According to other reports, the expected direct impact of US
reciprocal tariffs would vary in nature for the sectors in India. The impact is
expected to be largely neutral for electronics, textiles, agricultural
products, chemicals, and automobiles and parts.
In electronics, higher reciprocal tariffs on China would
mean a neutral impact for India’s electronics exports, said the report by
CareEdge Ratings.
Meanwhile, the recently-announced Rs 22,919 crore
Electronics Component Manufacturing Scheme (ECMS), which has the potential to
generate nearly 1 lakh direct jobs and several indirect jobs, focuses on the
local production of sub-assemblies and bare components like inductors,
resistors, PCBs and capacitors, etc.
The scheme envisages to attract investment of Rs 59,350
crore, result in production of Rs 4,56,500 crore and generate additional direct
employment of 91,600 people and many indirect jobs as well during its tenure.
There has been five times increase in production over 10
years (17 per cent CAGR) to reach Rs 9.5 lakh crore in 2024, while 25 lakh jobs
have been generated.
There has also been six times increase in exports (43 per
cent CAGR) to Rs 2.4 lakh crore in 2024. Electronics items are now among
India’s top three export items.
