US Tariffs Create Headwinds for Indian Cable and Telecom Equipment Manufacturers
American companies are awarding orders worth billions of dollars to build infrastructure for artificial intelligence (AI) companies, creating a significant opportunity in the data center market. However, US tariffs have either squeezed margins or disrupted exports for Indian cable and telecom equipment makers, preventing them from fully capitalizing on this boom.
Margin Compression and Export Contractions
Operating margins have narrowed for Sterlite Technologies Ltd (STL), while exports have contracted for several major Indian manufacturers including HFCL Ltd, Polycab Ltd, Havells India Ltd, and RR Kabel Ltd. This trend has emerged since the US imposed stiff tariffs, according to management commentary over the past two quarters.
The US government is also expected to execute the 2021 $42.45 billion Broadband Equity, Access and Deployment (BEAD) programme to expand high-speed internet access, further driving demand that Indian companies are struggling to meet due to tariff barriers.
Company-Specific Impacts
Sterlite Technologies Ltd (STL) has experienced the most pronounced impact as a key supplier of optical fibre cable. "The US tariff reset, effective mid-quarter two of FY26, created a temporary headwind, reducing reported EBITDA by almost 760 basis points in quarter three of the current fiscal and bringing the reported margins to 10.3%," said Ajay Jhanjari, group chief financial officer at STL.
In the previous quarter, the company attributed a 300-bps contraction in their margins to the US tariffs. STL is attempting to mitigate the impact by passing on some tariffs to customers and aggressively ramping up production at its US facility in South Carolina, though scaling production there has proven challenging.
Polycab India faced a double challenge with higher costs of copper and aluminium between September and December, compounded by US tariffs that further dampened revenue and margins. "Elevated US tariffs disrupted the established supply chain and moderated global growth," said chief financial officer Niyant Maru.
RR Kabel reported a 2 percentage point decline in its share of exports to 6% in the second quarter ended September, directly attributing this to the tariffs.
Havells India, which enjoyed "very good" export growth in FY25, has been hit hard this year. "Unfortunately, we have been hit by the tariffs, and there is lesser demand from the US market," said Anil Rai Gupta, chairman and managing director.
Strategic Responses and Future Outlook
Despite current challenges, industry executives and analysts expect exports to the US to rebound, particularly if a potential India-US trade deal materializes to lower tariffs.
"There is an opportunity for the Indian telecom and fibre cable industry in the US market. The market will continue to stay bullish as there is a lot of demand for data centres, backhaul, and consumer broadband," said Siddhant Cally, research analyst at Counterpoint India.
Companies are adopting various strategies to navigate the tariff landscape:
- STL is focusing on production expansion at its US facility
- Polycab is implementing a hybrid business model in the US, selling through both distributors and directly to large institutional customers
- Havells India plans to bolster brand-building efforts in the US and Middle East markets
"Over the medium term, vendors that localize manufacturing or final assembly in the US will be better positioned to mitigate tariff exposure and protect margins," added Cally.
Indian companies continue to retain a relative cost advantage, though this has narrowed post-tariffs. The industry remains hopeful that bilateral trade negotiations will provide relief and enable them to participate more fully in the US data center and broadband infrastructure boom.
