India's Tech Hardware Sector Poised to Benefit from US Tariffs on China, Vietnam
India's technology hardware industry, particularly smartphone production, could benefit as the US increases tariffs on electronic imports from major players such as China, Vietnam, and Mexico. CLSA recently showed in a report that the new 25% to 54% tariffs could instigate a shift in supply chains that isIndia-friendly.
These three nations represent 51% of US imports of electronics, with smartphones contributing $51 billion alone. China and Vietnam are both hit by tariffs of 34% and 46% respectively, while India's lower tariff of 26% makes it a more viable manufacturing base.
Large phone makers such as Apple, Samsung, and Motorola already have local assembly facilities in India. The move is also supported by India's huge local market and increasing local production capabilities, driven by the government's Production Linked Incentive (PLI) programme. This marriage makes India more cost-competitive, says CLSA.
Dixon Technologies, one of the top domestic electronics players, is likely to be one of the prime gainers. With collaborations with Motorola, Google, and Nokia, Dixon stands to benefit immensely from the changing dynamics. Apple and Samsung's assembly is either in-house or through unlisted partners, whereas Dixon's share is likely to increase.
But the prospect is not without obstacles. Brazil, with only a 10% tariff, might be a formidable competitor. Furthermore, changing bilateral arrangements—such as Vietnam's proposal to remove tariffs on US goodscould erode India's edge.
Nevertheless, the report indicates that India's mix of positive tariffs, expanding infrastructure, and active policy support puts it well-positioned to draw additional global electronics manufacturing in the next few years.
