NEW DELHI: A tweet and a phone call late on Monday between Prime Minister Narendra Modi and US President Donald Trump have lifted expectations of greater policy certainty for India’s electronics manufacturers, even as the fine print of the much-awaited bilateral trade deal, and its implications for sector-specific tariffs remain unclear.
Trump said that he and Modi have agreed to a trade deal between India and the US, nearly a year after the two sides agreed to work towards a comprehensive bilateral trade agreement. Under the deal, Washington would lower its reciprocal tariff on Indian goods from 25% to 18%, while India would reduce its tariffs and non-tariff barriers against the US to zero, Trump said.
The US is also removing the extra 25% duty on Indian goods applied in response to India’s purchases of crude from Russia, Bloomberg reported, citing officials familiar with the matter.
Modi in a post on X, said he was “delighted that Made in India products will now have a reduced tariff of 18%.”
Policy certainty
For India’s electronics sector, where exports are dominated by smartphone assembly for Apple, the proposed agreement is being read less as an immediate volume trigger and more as a signal of policy stability that could reinforce long-term investment and export plans.
Two companies that stand to benefit from greater trade clarity are homegrown Tata Electronics and Taiwan-based global contract manufacturer Foxconn’s India entities under Bharat FIH Ltd. Both have invested significantly in increasing their iPhone assembly capacities, as well as moving deeper into the electronics supply chain to generate more value.
“While the fine print is awaited in order to confirm the net impact on electronics import duties, the trade deal agreement between the two countries brings policy certainty, and gives India strong footing to further pursue growth in exports,” said Ankush Wadhera, managing director and partner, and India leader - semiconductors at consultancy firm, Boston Consulting Group.
Wadhera added for sectors that are operating at substantial scale targeted at domestic consumption - such as electronics, the trade deal will help build a case for expanding the export quantum, and growing India’s stature as a destination beyond China with strong policies, fiscal support and a unique geopolitical standing in the continuously evolving global trade setup.
According to data from the Ministry of Electronics and IT, in FY25, India exported $38.6 billion of electronics. Exports of iPhones, in this base, accounted for over $10 billion, making it a critical export category for the country. Mint reported in June last year that by the end of FY27, India may assemble over 60 million iPhones for exports, most of which is likely to cater to the US market.
Trump’s tariffs have weighed upon Apple, the largest US tech firm that relies on a globally distributed supply and assembly chain. On 29 January, Apple chief Tim Cook said during the company’s December quarter earnings call that the iPhone-maker bore $1.4 billion, or 0.9% of its quarterly operating revenue, in additional cost as a result of tariffs on countries around the world, especially China.
Tata Electronics, which currently accounts for about 40% of all iPhone assemblies in India, declined to comment. Apple and Foxconn did not immediately respond to Mint’s queries.
A person close to developments said that Apple’s strategic certainty of expanding the percentage of devices made in India continues to remain the same as before, “since electronics were already exempted from the US trade tariffs.”
Harshit Kapadia, vice-president at brokerage firm Elara Capital, said that more than a direct increase in top line, “the trade deal signals policy certainty and stability, and would allow India’s electronics sector to significantly invest in increasing their export capacities, since exports and industrial electronics offer higher margins and growth opportunities.”
“The current industry will grow in maturity and cater to stronger vertical integration of electronics, which in turn will attract more business from across sectors. This will boost EMS firms, at a time when India’s top listed EMS player has struggled in the bourses,” Kapadia said.
The top firm in question is Dixon Technologies, which has come under pressure for its over-reliance on mobile phone assemblies as a sector, one that saw a 28% slowdown in the December quarter, as per Dixon’s earnings.
Beyond Apple’s iPhones, other categories such as medical and industrial electronics are also likely to see a fillip in exports, thereby making companies such as Dixon Technologies and Syrma SGS bullish for the near term.
”While the US does not have a massive contribution to our revenue right now, plans to focus on the US as a market have been on the back-burner due to uncertainties over the past year. Now, we’re confident of doubling-down and clients from the US to start coming in, and in the near term, we expect export revenue to the US to contribute a third of Syrma’s top line,” said Jasbir Singh Gujral, managing director of Syrma SGS.
A spokesperson for Dixon Technologies could not be reached immediately for a comment.