India’s tech hardware sector is set to gain a competitive edge as the US imposes tariffs on electronics imports from key countries. According to a recent report by CLSA, the shift in the global supply chain could favour India, particularly in the smartphone manufacturing segment.
The US has implemented tariffs ranging from 25% to 54% on electronics imports from China, Mexico, and Vietnam, which together account for 51% of US electronics imports. Smartphones account for $51 billion worth of imports for the US, with China, Vietnam and India being key sources, CLSA said.
Prominent smartphone brands like Apple, Samsung, and Motorola already have assembly operations in India. With China facing a 34% tariff and Vietnam 46%, India’s relatively lower tariff of 26% may shift supply chain dynamics, according to the brokerage.
India’s lower tariff, combined with its large domestic market and increasing backward integration supported by the Production Linked Incentive scheme, enhances its cost competitiveness, it said.
Dixon Technologies is likely to be a key beneficiary of this shift. The company has established relationships with major brands such as Motorola, Google, and Nokia. 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, CLSA said.
Despite the positive outlook, there are potential risks. A rise in production in Brazil, which faces a lower tariff of 10%, could alter the competitive landscape. Additionally, bilateral trade agreements, such as Vietnam’s offer to remove all tariffs on US imports, could impact India’s advantage, the brokerage said. NDTV Profit