Expansion plans of Apple, Motorola and other electronics contract manufacturers could be hit if the US goes ahead with its tit-for-tar tariff plan, industry analysts and executives said on March 5, hours after American President Donald Trump said reciprocal levies will kick in from April 2.
They said reciprocal tariffs on electronics and smartphone imports from India can disrupt their investment plans unless India reduces tariffs on imports of these goods from America or the two countries reach a bilateral trade agreement.
India imposes a 16.5 percent basic customs duty (BCD) and surcharge on smartphones and electronics from the US. A 16.5 percent reciprocal duty by the US will make manufacturing in India less competitive, erasing its cost advantage.
Addressing his first joint session of Congress after taking office, US President Donald Trump again raised the issue of India's import duties as he reiterated his administration’s commitment to “America First” and “fair trade”.
“India charges us tariffs, 100 percent. The system is not fair to the US, it never was,” Trump said, adding the reciprocal tariff plan would come into force 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.
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 competitor in these categories. The move, it takes place, 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.
“If the U.S. matches the 16.5 percent tariff on India-manufactured smartphones, it will be lower than the 20 percent tariff on China but will reduce the competitiveness of the Indian manufacturing ecosystem,” a top executive with an electronics manufacturing services company told Moneycontrol.
“There is also the ongoing PLI scheme with a 5 percent benefit. However, the competitiveness of the Indian manufacturing ecosystem will be reduced as the PLI ends in 2026,” he added, stressing that India must finalise the BTA at the earliest.
Made in India in jeopardy?
As one of India’s largest electronics exporters, Apple ships iPhones to international markets, with a large share going to the US.
The company is increasing its focus on exports, aiming to manufacture more than 25 percent of its iPhones in India in the next two to three years.
According to Omdia, India accounted for around 23 percent, or 42 million units, of Samsung's total production in 2024. The South Korean electronics giant may also consider increasing its focus on Indian manufacturing, especially with original device makers (ODM) like Huaqin and Longcheer, who are working with Indian EMS players such as Dixon and Bhagwati.
Motorola, owned by Lenovo, has also invested heavily in India for local smartphone manufacturing and related investments to help achieve its goal of doubling smartphone exports from India. It exports Made-in-India smartphones predominantly to the US through its domestic contract manufacturing partner, Dixon Technologies.
The investments will be made to expand production capacity with its domestic contract manufacturing partner, Dixon Technologies.
Apple is projected to shift nearly 15 percent of its iPhone production from China to India by FY25, surpassing its earlier target of 10 percent by FY26.
Currently, the company benefits from zero-duty access for Indian-made iPhones entering the US, making local production highly profitable.
Apple’s key supplier, Hon Hai Precision (Foxconn), is relocating supply chains to India for iPhone manufacturing. A recent JP Morgan report said, “Hon Hai’s India capacity is growing from 11 percent in 2024 to 21 percent in 2027.”
Analysts warn that if tariffs are imposed, Apple may have to raise iPhone prices or absorb losses, affecting profit margins.
Since China, India and Brazil are Apple’s primary iPhone assembly hubs, shifting production elsewhere in the near term would be impractical.
“With tariffs imposed, Apple will either have to increase device prices to cover costs or compromise on margins — or both,” said Abhilash Kumar, an analyst at TechInsights. “China, India, and Brazil are Apple’s key assembly hubs, and expanding beyond them would be tedious.”
Faisal Kawoosa, an analyst at TechArc, said, “The US could exclude certain brands from reciprocal tariffs. Apple may also consider routing exports through countries without reciprocal tariffs.”
Tarun Pathak, Research Director at Counterpoint, said while consumer electronics might be spared, other sectors — such as pharma, agriculture, and auto — could be affected. “If tariffs do apply, consumers will likely experience a price increase, making iPhones and other electronics more expensive in the US,” Pathak said.
India’s mobile phone exports surpassed Rs 25,000 crore in January. The cumulative export for FY25 is projected to reach Rs 1.80 lakh crore, marking a 40 percent year-on-year rise and a 680 percent growth since the PLI scheme was introduced in FY21, the India Cellular and Electronics Association (ICEA) has said.
iPhones accounted for nearly 70 percent of export revenue in January 2025. One of Apple’s major contract manufacturers, Foxconn, contributed 33 percent of total monthly exports, amounting to $960 million.
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