The US will continue to allow duty-free imports of laptops, smartphones, and servers from India beginning August 1, thus shielding these products from the 25% reciprocal tariffs which will come into effect from that date. This is because the US continues its Section 232 investigation into the impact of these products on national security.
Electronics exporters
Therefore, for now the zero-tariff treatment puts Indian electronics exporters in a strong position in the US market. On this front, though India stands shoulder to shoulder with China, as both countries’ electronics remain outside the tariff net for now, India still has an advantage because there’s a 20% duty Fentanyl duty on China. However, the zero duty is applicable on Vietnamese and Taiwanese electronics also.
In the June quarter, India emerged as the largest exporter of smartphones to the US, accounting for 44% of total imports in the segment, edging out both China and Vietnam.
Future
While the outcome of the Section 232 investigation could alter the tariff landscape down the line, for now, Indian electronics manufacturers remain insulated, and are likely to benefit in the near term. Industry analysts tracking trade policy said that any reversal would take time to implement, and would likely come with carve-outs for segments that are already tightly woven into US corporate supply chains.
According to analysts, India remains too cost-competitive for the US to ignore. Assembling an iPhone in India costs around $30 per unit. Add a 25% tariff, and the cost to land it in the US rises to $37.5, still far below the $390 it would cost to manufacture the same unit in the US, mainly due to labour costs being over 12 times higher.