The recent announcement of a trade deal between India and the United States has injected a wave of optimism into India's electronics manufacturing sector, particularly for companies like Apple that are heavily invested in the country. While the immediate impact on trade volumes may be modest, the agreement is being hailed as a crucial signal of policy stability that could accelerate long-term growth and investment.
A Signal of Policy Certainty for Electronics Makers
Following a tweet and phone call between Prime Minister Narendra Modi and US President Donald Trump, expectations have risen for greater policy certainty. The deal, which comes nearly a year after both nations agreed to work towards a comprehensive bilateral trade agreement, involves Washington lowering its reciprocal tariff on Indian goods from 25% to 18%. In return, India will reduce its tariffs and non-tariff barriers against the US to zero.
For India's electronics sector, where exports are dominated by smartphone assembly for Apple, this agreement is seen less as an immediate volume trigger and more as a reinforcement of long-term plans. "The trade deal agreement brings policy certainty and gives India strong footing to further pursue growth in exports," said Ankush Wadhera of Boston Consulting Group.
Apple's Expanding Footprint in India
Apple Inc. is poised to more than double its iPhone manufacturing in India within the next three years, with net production expected to cross 50 million units. This expansion is supported by key players like Tata Electronics, which currently accounts for about 40% of all iPhone assemblies in India, and Foxconn's India entities under Bharat FIH Ltd. Both companies have invested significantly in increasing assembly capacities and deepening their involvement in the electronics supply chain.
According to data from the Ministry of Electronics and IT, India exported $38.6 billion worth of electronics in FY25, with iPhones contributing over $10 billion. By the end of FY27, India may assemble over 60 million iPhones for exports, primarily catering to the US market.
Broader Implications for the Electronics Sector
The trade deal's benefits extend beyond Apple's iPhones. Sectors such as medical and industrial electronics are also likely to see a boost in exports. Companies like Dixon Technologies and Syrma SGS are optimistic about near-term growth. "We're confident of doubling-down and clients from the US to start coming in," said Jasbir Singh Gujral, managing director of Syrma SGS.
However, challenges remain. Dixon Technologies, for instance, has faced pressure due to over-reliance on mobile phone assemblies, which saw a 28% slowdown in the December quarter. The trade deal could help diversify and strengthen the electronics manufacturing ecosystem.
Strategic Certainty and Future Growth
Despite the positive outlook, some nuances persist. A person close to developments noted that Apple's strategic plans for expanding device manufacturing in India remain unchanged, as electronics were already exempted from US trade tariffs. Nonetheless, the deal is expected to enhance India's appeal as a manufacturing destination beyond China, thanks to strong policies, fiscal support, and a unique geopolitical standing.
Harshit Kapadia of Elara Capital emphasized that the trade deal signals policy certainty and stability, allowing India's electronics sector to invest in increasing export capacities. "Exports and industrial electronics offer higher margins and growth opportunities," he added.
As India continues to mature in electronics manufacturing, the focus will shift towards stronger vertical integration and attracting more business across sectors. This evolution is poised to benefit EMS firms and solidify India's position in the global trade landscape.
