Key Points
US tariffs place India strategically advantaged compared to Chinese exporters
Electronics sector could expand from $10B to $80B annually
India's automotive exports have significant market penetration potential
Bilateral Trade Agreement could unlock massive economic opportunities
For India, the additional 27 per cent tariff places it in the lower half of targeted countries, creating opportunities beyond traditional export sectors like engineering goods, electronics, gems and jewellery, textiles, and apparel.
"The tariffs could also shift competitiveness in India’s favour in sectors where other regional exporters are more severely impacted. To maximise this advantage, India must not only negotiate with the US to maintain market access but also collaborate with FTA partners in Asia to restructure supply chains and seize new opportunities," said Agneshwar Sen, Trade Policy Leader, EY India.
In the last fiscal year (FY 2023–24), India exported electronics worth $10 billion to the US.
The ICEA estimates the potential to grow this figure to $80 billion annually across diverse electronics product categories in the coming years, contingent upon sustained policy support and a conducive tariff regime, with bilateral trade crossing $100 billion.
According to experts, while US tariffs will have some impact, India could benefit as China's cumulative tariffs, including previous tariff actions, range from 54 per cent to as high as 154 per cent, and Vietnam faces 46 per cent.
Pankaj Mohindroo, Chairman of ICEA, said the genuine long-term inflection point for India's electronics trade with the US lies in the swift and successful conclusion of a comprehensive Bilateral Trade Agreement (BTA).
According to Saurabh Agarwal, Partner and Automotive Tax Leader, EY India, India's electric vehicle sector has a prime opportunity to capture a larger share of the US market, especially in the budget car segment.
"China's 2023 auto and component exports to the US stood at $17.99 billion, while India's were only $2.1 billion in 2024, highlighting the potential for growth," he mentioned.
To accelerate this, the government should enhance the PLI scheme by including more auto components, opening it to new players, and extending it by two years, said experts.
