Impact of US Semiconductor Tariffs on India: Minimal Immediate Effects Expected
Click to start listening
Synopsis
India is set to face minimal short-term effects from US semiconductor tariffs due to its limited export volume. With an import duty of zero and increasing domestic production, India is well-positioned to meet its semiconductor needs without major disruptions.
Key Takeaways
- India will not see major short-term impacts from US tariffs.
- The country's import duty on semiconductors is currently zero.
- Local semiconductor production is on the rise to meet demand.
- Long-term disadvantages for Indian brands are unlikely.
- The global semiconductor industry will face significant changes.
New Delhi, Feb 20 (NationPress) The Indian market is not expected to face significant immediate repercussions from the US tariffs on semiconductors, as the country is not a major chip exporter to Washington, according to statements made by the industry association on Thursday.
Additionally, India's import tax on semiconductors stands at zero, eliminating any concerns regarding reciprocal tariffs, as noted by Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA).
The majority of India's forthcoming semiconductor manufacturing and Outsourced Semiconductor Assembly and Test (OSAT) facilities will serve global brands.
With the rising domestic demand for semiconductors in India, the country will increasingly depend on locally produced chips, thereby reducing reliance on imports.
In the longer term, Indian semiconductor companies are not expected to face substantial disadvantages, as the US tariffs will be uniformly applied to all exporting countries, according to Chandak.
The imposition of tariffs exceeding 25 percent on semiconductors by the Donald Trump administration in the US is anticipated to have profound implications for the global semiconductor sector.
This action will influence costs, supply chains, innovation, and geopolitical dynamics, profoundly affecting the industry's future.
A 25 percent tariff is likely to drastically raise the cost of imported semiconductors into the US, especially from Taiwan, South Korea, and China, which are leaders in global chip production.
The increased costs will probably be transferred to consumers, leading to higher prices for smartphones, laptops, electric vehicles, and industrial electronics.
Companies reliant on semiconductor imports, such as Apple, NVIDIA, and Tesla, may experience augmented production costs, which could result in diminished profit margins or increased prices for consumers, according to IESA.
To mitigate risks, companies might diversify their supply chains by sourcing chips from regions without tariffs or by boosting domestic investments.
Building semiconductor fabs is a highly complex and costly endeavor, with expenses ranging from $10 billion to $25 billion per facility.
"Businesses must thoroughly assess a variety of factors prior to making investment choices, including availability of talent, tax regulations, regulatory landscapes, and environmental and labor market conditions," stated the industry body.
