Donald Trump tariffs: Indian electronics pivot as levies push diversification; new markets eyed

With the US set to impose steep new tariffs that industry executives say resemble the protectionist levies of the Great Depression era, Indian electronics exporters are scouting alternative markets in Europe, the Middle East and Africa.

The move comes as the US, still the largest buyer of India’s electronics goods, becomes a tougher market, weighed down by tariff hikes and shifting content-origin rules. “I have been reaching out to my customers proactively. They are still issuing orders, but there are concerns about how this will pan out,” Sanjay Agarwal, managing director of Globe Capacitors, which exports about Rs 100 crore worth of materials annually to the US, was quoted as saying by ET.

“I have already controlled my purchases, especially for the materials I buy only for US customers. As far as looking at alternative markets is considered, that is always on the horizon”, he added. While most electronics exports, including smartphones, currently remain exempt from both the 25% tariffs imposed by US President Donald Trump and the additional 25% set to take effect from August 26, these exemptions are under review.

They hinge on a US commerce department section 232 investigation mandated under the Trade Expansion Act, 1962, with findings expected in the coming weeks, according to ET. Rajoo Goel, secretary general of the Electronic Industries Association of India (ELCINA), said about 75–80% of India’s electronics exports are shielded from the new 50% tariff regime, but the remainder, including PCB assemblies, telecom gear, consumer products and power electronics, will feel the pinch.

“For these products, our value addition is higher and would impact several domestic companies, including MSMEs,” Goel said, as per ET.

US-bound electronics exports from India jumped 43.5% to $15.89 billion in FY25. Smartphones led the surge, accounting for $10.56 billion, up 89% from the previous year and made up 66% of all electronics exports to the US. “We are monitoring the situation closely and are looking at other markets for our products.

For mobile phones, the Middle East and Africa are coming up as important destinations and for lighting, Europe is a market we are evaluating,” said an executive at an electronic manufacturing services (EMS) firm.

Assembled photovoltaic cells (PVC) modules, the second-largest category, fell 32.7% to $1.81 billion in FY25 due to tighter curbs on imported units. Other exports included electronic instruments ($1.4 billion), computer hardware such as laptops ($154 million), and consumer electronics like cameras ($115 million). For the roughly $2 billion worth of electronics exports to the US beyond smartphones and PVC modules, there are ample alternative markets, according to Amrit Manwani, chairman of EMS major Sahasra Group. “Exporters should explore Europe, Australia, South East Asia, and given the geopolitical realignment, even Russia.Many firms may have to adapt and establish partial or full manufacturing in the US given its predominance as a market, if things don’t ease,” Manwani said. Another EMS executive was quoted as saying by ET that companies need to focus on “demand resilience” in addition to supply chain resilience. “Companies will have to look at other markets like the Middle East, Europe, Latin America and Africa. It is an opportunity for Indian companies to go beyond the US and deepen their presence in other countries as well,” the executive said.