Smartphone manufacturers like Apple and Samsung, who assemble a portion of their handsets in India, are not “overly concerned” about the 26 per cent reciprocal tariff rate that the United States has imposed on New Delhi yet, but discussions between the companies and the government are ongoing given the dynamic nature of the development, a top government official said. Responding to a question by The Indian Express on the potential impact that smartphone makers could face in India, owing to the tariffs imposed on the country along with China and Vietnam, IT Secretary S Krishnan said, “We have been in regular consultation with manufacturers in India, and certainly within the sector (smartphone makers), we are speaking to them on an ongoing basis. They are not overly concerned right now”. However he cautioned: “But it also depends on how this whole situation plays out; it is a dynamic situation, there are to be negotiations and discussions… which are going on… It is difficult to single out one sector right now and say what will finally happen." On April 2, US President Donald Trump announced “retaliatory” tariffs on a slew of countries, demolishing an over 75-year-old global trading system with the imposition of an across-the-board baseline levy. India was slapped with a 26 per cent levy, while key competitors in tech manufacturing like China and Vietnam have received much higher rates. Electronics manufacturers that are producing and exporting from India have acknowledged that while it could result in a cost barrier, the measure could also offer some advantage to India owing to higher levies imposed on its competitors. Immediate risks, however, arise from countries like Brazil, Saudi Arabia and the United Arab Emirates (UAE). Brazil will be subjected to the baseline 10 per cent levy, and as a result could draw away some investments from India. Similarly, Saudi Arabia and UAE, too have gotten away with just the baseline levy, and Philippines has been charged with a lower rate than India at 18 per cent. “Saudi Arabia and UAE represent near-term threats to India’s electronics exports due to their SEZs, competitive manufacturing environments, and potential labour-cost advantages. Brazil’s favourable tariff treatment, despite historical trade barriers, adds to strategic ambiguity and warrants careful monitoring,” electronics lobby group India Cellular & Electronics Association (ICEA), had said in a statement earlier. The group represents companies including Apple, Google, Vivo, Oppo, and Dixon among others. Smartphone makers like Apple have made India one of their production and assembly hubs, from where they also export to many countries, including the US. In India, Apple assembles around 10 per cent of its iPhones through its contract manufacturers Foxconn and Tata Electronics, and is the prime beneficiary of New Delhi’s production linked incentive (PLI) scheme for smartphones. The company’s business in India is considered crucial in the power corridors of New Delhi, as it is seen as a flagbearer for the manufacturing narrative it wants to project, while drawing in more marquee names. These tariffs mean that it will become more expensive for Apple, than it currently is, to export its produced goods from these countries to the US — meaning that the company could either reduce production there, or pass on the additional cost to consumers, which would make its products pricier. For the company, it is an essentially precarious situation given its other major production hubs – China (where it still makes a majority of its phones) and Vietnam – have been hit with high tariffs. Since Trump’s retaliatory tariffs, Apple’s stock is down more than 15 per cent.
