Electronics industry seeks zero duty on US smartphone, wearables, telecom imports to dodge Trump’s reciprocal tariff

US President Donald Trump slammed India's import duties in his first speech to a joint session of Congress on March 5. Trump said that reciprocal tariffs would kick in on April 2.

Electronics and smartphone manufacturers in India are urging the government to eliminate tariffs on imports from the US for smartphones, telecom equipment, wearables, and consumer electronics, arguing that America is not a direct manufacturing competitor in these categories.

A top industry executive told Moneycontrol that the move will ensure smartphones—India’s fastest-growing export to the US—are not subject to any retaliatory or reciprocal tariffs from the US and will also play a critical role in preserving the country’s competitive edge, particularly against China and Vietnam. He spoke on condition of anonymity.

US President Donald Trump slammed India's import duties in his first speech to a joint session of Congress on March 5. Trump said that reciprocal tariffs would kick in on April 2.

India and US officials are negotiating the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) with the intention of concluding them by the fall of 2025.

The Indian Cellular and Electronics Association of India (ICEA), which represents Apple, Foxconn, Dixon, and other top handset makers, officially submitted its recommendations in a letter to Sunil Barthwal, Commerce Secretary of the Ministry of Commerce & Industry, Government of India, on March 1. Moneycontrol has reviewed a copy of the letter.

As part of the recommendations, the industry has submitted a zero percent tariff for imports from the US on smartphones, hearables and wearables, IT hardware products and Servers, Televisions, Air conditioners and Telecom products.

India currently imposes a 16.5% basic customs duty (BCD) and surcharge on imports of smartphones and electronics from the US. A 16.5% reciprocal duty would make manufacturing in India less competitive, erasing its cost advantage.

In the letter, the ICEA said the U.S. is not an immediate manufacturing competitor for these items. “There is a minimal risk. The proposed zero duty for pro will help the local industry pursue the target of $50 billion in smartphone exports and $80 billion in overall electronics exports to the U.S. This ambition aligns with India’s broader $500 billion electronics production goal,” ICEA said.

The industry has also urged the government to continue refining policies such as production-linked incentive schemes, transparent public procurement, and investment frameworks to encourage U.S. companies to expand their final assembly and deepen value chains and manufacturing operations in India.

“We must develop a cohesive strategy to integrate with U.S.-based supply chains, positioning India as a preferred electronics manufacturing destination—especially for smartphones, IT hardware, wearables/hearables, Air Conditioners and Consumer Electronics,” the ICEA said.

According to data from the electronics and handset representative body ICEA, the US had the largest electronics market, worth $520 billion in CY2023. This includes smartphones worth $60 billion, switching and routing apparatus worth $51.3 billion, laptops and tablets worth $46.3 billion, desktops and servers worth $37.1 billion, Air Conditioners worth $14 billion, wearables and audio worth $12.4 billion, and colour televisions worth $12 billion.

Another top executive working with an electronics manufacturing services company said the US market is India's most significant export opportunity. “If we don’t address the reciprocal tariff challenges, it can severely impact our electronics manufacturing aspirations and shift large global value chains (GVCs) from India to other favourable destinations.”

The second executive said that if the US matches the 16.5% tariff on India-manufactured smartphones, it will be lower than the 20% tariff on China. “There is also the ongoing PLI scheme with a 5% benefit. There is a big difference compared to China.  However, the competitiveness of the Indian manufacturing ecosystem will be reduced as the PLI ends in 2026,” he said, adding that India must finalise a BTA deal with the US as soon as possible.

Analysts said that if there is no BTA deal or zero tariffs for the US market, Apple, Samsung, and other contact manufacturers could face significant setbacks following the Trump administration’s move to enforce reciprocal tariffs on several categories, including electronics and smartphone imports from India. This could disrupt their plans to expand manufacturing investments unless India reduces tariffs on these categories. Currently, Indian exports of smartphones and electronics to the US face zero duty.

As one of India’s largest electronics exporters, Apple ships iPhones to international markets, with a large share headed to the US. Apple is intensifying its focus on exports, with plans to manufacture more than 25% of its iPhones in India within the next two to three years.

Apple’s key supplier, Hon Hai Precision (Foxconn), is on track for supply chain relocation to India for the iPhone manufacturing business, as per JP Morgan’s recent note seen by Moneyciontrol. “Hon Hai’s India capacity is growing from 11% in 2024 to 21% in 2027,” the brokerage said.