India's electronics industry gets two-week breather from US tariffs as Section 232 review is underway: Govt sources

India's electronics industry gets two-week breather from US tariffs as Section 232 review is underway: Govt sources

India’s electronics industry, including Apple suppliers, has a two-week breather from the proposed 25% tariffs announced by the US as the section 232 tariffs covering electronic products such as smartphones and laptops remain under review amid ongoing bilateral negotiations, sources said.

They added sector 232 is expected to come up for review within the next two weeks.

US President Donald Trump on Wednesday announced a sweeping 25% duty on all Indian goods starting August 1, along with an unspecified penalty for India’s defence and energy ties with Russia.

Section 232 had earlier allowed smartphones, laptops, and semiconductors to remain exempt from a 10% baseline tariff imposed in April. “That exemption still stands for now, and discussions are ongoing. Until the Section 232 tariffs are officially announced, exports of smartphones from brands like Apple, Samsung, and Motorola to the US won’t be affected,” a government official said.

It’s unclear whether the proposed 25% duty would be imposed on top of the existing 10% tariff. However, officials said efforts are underway to protect electronics exports, especially high-value items like smartphones and laptops, from the full blow.

“The review is ongoing and is expected to be concluded within two weeks,” a second official said, adding that the industry is hopeful smartphones and laptops will remain exempt.

Trump’s move directly threatens India’s ambitions to become a key global hub for iPhone exports.

Apple, which has rapidly expanded local production through contract partners Foxconn and Tata Electronics, shipped over $5 billion worth of iPhones from India in the April–June quarter, nearly 70% of the country’s smartphone exports.

Apple had targeted producing 60 million iPhones in India in 2025, up from 35–40 million units last year. CEO Tim Cook confirmed during the Q2 earnings call that all iPhones sold in the US during the June quarter were assembled in India.

“Apple’s ambitions to turn India into a major iPhone export hub for the US could face a serious challenge due to tariffs if there is no exemption,” said Neil Shah, Vice-President at Counterpoint Research.

“That rise in exports has triggered concern from Trump, who sees Apple’s increasing dependence on India,” Shah added. The tariff move also gives Trump a geopolitical lever to “square off with India and gain leverage over the trade deficit.”

India had emerged as a preferred alternative to China for global electronics manufacturing amid ongoing geopolitical tensions. But with both countries now potentially facing US tariffs, Apple may be forced into a difficult recalibration.

In the short term, Apple is expected to adopt a wait-and-watch strategy. “They can either absorb the costs or pass them on to consumers, or hope the policy changes again, as has happened with Trump in the past,” Shah said.

Apple is already dealing with rising component costs, especially with TSMC’s new 3nm chip getting more expensive.

“So they will either need to squeeze costs elsewhere or raise prices, like Samsung did with its foldables,” he said, adding Apple may use the upcoming fall iPhone launch to adjust prices and offset both tariff and component cost pressures.

“The new 25% tariff on Indian exports to the US will certainly hit Apple’s plans of making India a major iPhone export base for the American market,” said Navkendar Singh, Associate Vice President, Devices Research, IDC India, South Asia & ANZ.

The US accounts for roughly 25% of Apple’s annual iPhone shipments, or about 60 million units. “The plans to meet all iPhones to US coming from India need significant iPhone production expansion in India, which will suffer a blow now,” Singh said.