Even as countries like Vietnam and Taiwan signal a willingness to reduce import duties to counter new reciprocal tariffs announced by the US, analysts say India remains better placed to safeguard and potentially grow its contract manufacturing base in smartphones and electronics.
The key reason for the same being that India not only faces a lower reciprocal tariff rate under the US framework at 26% compared to Vietnam’s 46% and Taiwan’s 36%, but it also holds an advantage due to its relatively modest trade surplus with the US. At around $46 billion, the US trade deficit with India is significantly lower than it has with countries like China ($295.4 billion), Vietnam ($123.5 billion), and Taiwan ($73.9 billion). This gives India more room to manoeuvre in trade talks.
“Since Trump has pegged US’ trade deficit with various trading partners to levy reciprocal tariffs, its lower deficit with India compared to Vietnam or Taiwan puts it at an advantageous position vis-a-vis them in negotiations,” said Pareekh Jain, CEO of tech-focused research platform EIIRTrend.
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Supporting this view, Shridhar Kamath, partner and engineering & industrial products industry leader at Grant Thornton Bharat, said that negotiation leverage could focus on showcasing India as a vital partner in diversifying supply chains and stabilising the global smartphone ecosystem. “Addressing trade deficit concerns with proactive export policies can bolster the Indian manufacturing sector,” Kamath added. Being a net importer in certain sectors, India can propose bring down the trade deficit by importing good in those sectors.
Kunal Chaudhary, Tax Partner at EY India, said that India can propose targeted concessions to the US, such as enhancing market access for high-tech goods or energy products. “These sector-specific trade alignments can help offset the deficit and ensure a favourable stance in tariff adjustments,” he said.
This strategic play comes at a time when global electronics giants like Apple and Samsung are exploring alternative production bases outside China. Vietnam and Thailand have long been key hubs, but higher tariffs imposed by the US could undercut their cost competitiveness.
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“India’s 26% reciprocal tariff is relatively mild. When combined with the production-linked incentive (PLI) scheme, India emerges as an attractive,
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