MeitY wants tariff shield for electronics exports
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India wants its fledgling electronics exports, dependent largely on the US markets for overseas earnings, to be treated differently from Washington-bound shipments from established global players, such as those based in China and Southeast Asia, when the Oval Office fixes tariffs for these product categories.Production of electronics, lately undergirded by federal financial support in India, would require a relatively favourable tariff landscape to fill US retailing shelves against competition from established exporters from mainland China, Vietnam, Taiwan and Malaysia, said an official from the Ministry Electronics and Information Technology (MEITY)."The US is the largest destination for not only our overall electronics sector, but also for a range of individual electronic products,' said the official cited above. 'The large-scale production of many of these are now kicking in, due to government support over the past few years. It is crucial they don't face tariff barriers at this point, and we have communicated that to the Commerce Department."India's commerce ministry is at the vanguard of the ongoing Washington-New Delhi talks that would shape the final tariff landscape for bilateral trade. The MEITY official said it made the request to the commerce ministry for helping shield Indian electronics from the applicable continental tariffs dragnet during the recent inter-ministerial talks on the trade deal.In 2024, the United States imported a combined $478 billion of electrical machinery and electronics, according to the Observatory of Economic Complexity, an online repository of global trade data begun as a research project at the Massachusetts Institute of Technology. China (26.1 percent), Mexico (18 percent), Vietnam (8.8 percent), Taiwan (6.7 percent), and Malaysia (5.9 percent) made up the largest share of sectoral exports. Meanwhile, India was the 9th largest source of shipments, with a 3 percent share.Barring a last-minute postponement, as was the case in early July, the US will levy 26% average tariffs on all goods imported from India beginning August 1, over and above a 10 percent baseline tariff imposed on most imports.These ' reciprocal tariffs ' initially announced by US President Donald Trump on April 2 would especially hit Indian electronics exports, which have historically had much lower or nil tariffs, officials said."While smartphones, computers, and semiconductors were temporarily exempted from the tariffs, the US had threatened separate, sector-specific tariffs on these until last month," said the official cited above.According to the Commerce Department data, US-bound electronic exports stood at $15.89 billion in 2024-25, up 43.5 percent from $11.08 billion in the preceding year. Within this, smartphones and telecom instruments made up the largest chunk of exports at $10.56 billion, up from $5.56 billion in 2023-24. Smartphone exports shot up 89 percent in FY25, after rising 158 and 210 percent in FY24 and FY23, respectively.The government is especially concerned about the second largest export sub-category within electronics, components, which tanked 32.7 percent to $1.81 billion in 2024-25, down from $2.69 billion in 2023-24. This is mostly due to a 43.85 percent slump in the export of photovoltaic cells (PVC) assembled in modules, or made up into panels, due to rising domestic production in the US, increasing competition by Chinese producers as well as increasing scrutiny of shipments from India and South East Asian countries at US ports to stop circumvention of Chinese goods, officials said.Electronic instruments exports stood at $1.4 billion, rising 12.10 percent from $1.25 billion in the preceding year. Also, computer hardware of $154.08 million was exported to the US, rising 51 percent from $101.5 million in 2023-24. Another area where the government hopes to raise exports is consumer electronics, which fell 5.3 percent in the latest year to $115 million.
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