India’s Electronics Boom: 5 Powerful Reasons It Can Win Big Amid US-China Tech War Shakeup

The U.S. decision to temporarily exempt Chinese semiconductors, smartphones, and computers from steep 145% tariffs—while capping duties at 20%—has created a critical inflection point for global supply chains. As Washington prioritizes reducing dependence on China through security-driven investigations, India emerges as a viable alternative with its scale, policy incentives (like the $10 billion Semiconductor Mission), and geopolitical alignment.

Tech giants, including Apple and Foxconn, are already expanding operations in India, drawn by Production-Linked Incentives (PLI) and a booming consumer market. However, bureaucratic delays, skill shortages, and reliance on imported components threaten progress. To capitalize on this 12–18 month window, India must accelerate reforms, bridge skill gaps, and deepen partnerships like the U.S.-India iCET initiative.

Success hinges on transforming policy promises into a robust ecosystem for high-value manufacturing—positioning India not just as a factory floor, but as a hub for innovation in semiconductors, AI infrastructure, and electronics. The stakes? A permanent role in rewriting the rules of global tech trade. 

India’s Electronics Boom: 5 Powerful Reasons It Can Win Big Amid US-China Tech War Shakeup

As the U.S. tempers its tech trade war with China, a strategic opportunity is emerging for India to position itself as a critical player in the global electronics supply chain. Last week, former U.S. President Donald Trump announced temporary exemptions on tariffs for Chinese semiconductors, computers, and smartphones, maintaining a 20% duty instead of imposing the sweeping 145% tariffs applied to other imports. These exemptions, tied to an ongoing National Security Tariff Investigation, signal a recalibration—not an end—to U.S.-China decoupling. For India, this moment offers a narrow but pivotal chance to accelerate its manufacturing ambitions.  

The Tariff Tightrope: What’s at Stake 

The U.S. remains deeply reliant on Chinese electronics, which account for 30% of its tech imports. Trump’s exemptions aim to avoid immediate supply shocks while the investigation probes vulnerabilities in semiconductor and AI infrastructure supply chains. However, the reprieve is temporary. With the U.S. pushing to onshore advanced manufacturing (evidenced by Apple’s $500 billion investment plan, including a Houston-based AI server facility), companies are under pressure to diversify beyond China.  

India’s Strategic Opening 

India’s appeal lies in its combination of scale, policy incentives, and geopolitical alignment. The U.S.-China rift has already spurred companies like Apple, Foxconn, and Micron to expand operations in India. Now, with tariffs poised to escalate post-investigation, India could attract:  

• Semiconductor Fabrication: As the U.S. seeks alternate sources for chips, India’s $10 billion Semiconductor Mission and tax incentives position it to capture niche segments like legacy chips and packaging.  
• AI Hardware Ecosystem: Apple’s U.S. manufacturing focus on AI servers highlights growing demand for data infrastructure. India’s expanding data center market, projected to hit $10.9 billion by 2027, could align with this shift.  
• Consumer Electronics Assembly: With 145% tariffs looming for non-exempt Chinese goods, India’s Production-Linked Incentive (PLI) scheme, which has already boosted smartphone exports to $15 billion in 2024, offers a viable alternative. 

Challenges: Beyond Policy Promises 

While India’s PLI schemes and infrastructure upgrades (like the upcoming Dholera Semiconductor City) are steps forward, hurdles persist:  

• Bureaucratic Delays: Projects like Vedanta’s $20 billion chip plant have stalled over subsidy disputes.  

• Skill Gaps: The semiconductor sector alone needs 250,000 trained professionals by 2030; current capacity is under 10,000.  

• Supply Chain Gaps: High reliance on imported components (e.g., 90% of smartphone parts are still sourced abroad) undermines cost efficiency. 

The Road Ahead: Collaboration Over Competition 

India’s success hinges on leveraging partnerships. The U.S.-India Initiative on Critical and Emerging Technology (iCET), which prioritizes co-development in semiconductors and AI, could fast-track expertise sharing. Meanwhile, state-level partnerships—like Texas’s MoU with Tamil Nadu on chip design—highlight decentralized opportunities.  

A Closing Window 

The tariff exemptions grant India 12–18 months to solidify its foothold before U.S. measures intensify. To capitalize, India must streamline approvals, invest in R&D, and foster SME participation in component manufacturing. As global tech supply chains fragment, India’s ability to offer stability and scale will determine whether it becomes a true alternative to China—or misses its moment.  

Why This Matters: The U.S.-China tech war is reshaping global manufacturing. For India, this isn’t just about attracting factories—it’s about building an innovation ecosystem that reduces dependency on imports and positions the country as a hub for high-value tech production. The clock is ticking.