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Smartphones, pharma, energy escape 25% tariff
India's $86.5 billion exports to the US may remain exempt from Trump's 25% tariffs, mainly protecting electronics and pharmaceuticals, but uncertainty looms.
Almost half of India’s $86.5 billion worth annual exports to the US could, for the time being be left out of President Donald Trump’s 25% reciprocal tariff starting August 1, as comprehensive exemptions for electronics, pharmaceuticals, and energy products remain in place under existing White House orders.
The exemptions relate to Trump’s executive order 14257 issued on April 2, which exempted broad categories including semiconductors, pharmaceuticals, energy products, and critical minerals from the punitive levies that the US president announced. A White House clarification on April 11 then expanded it to specifically include finished electronics like smartphones, laptops, and computers—providing crucial protection for commodities that India exports heavily to the US.
According to government data, India exported goods worth $86.51 billion to the US in FY25 and imported $45.33 billion of American merchandise that year.
Smartphones generated $10.9 billion in exports to the US during 2024-25, while pharmaceutical exports totalled $9.8 billion and petroleum products contributed $4.1 billion.
Among these exports is Apple’s iPhone models. India currently accounts for more than a fifth of global iPhone production and has surpassed China to become the top supplier of the device to the US market.
In all, India exported goods worth $86.51 billion to the US in FY25 and imported $45.33 billion of American merchandise that year, government data has shown.
“Indian smartphones, medicines and petroleum products can still be exported to the US at zero tariffs, which is a major relief for many Indian exporters,” said Ajay Srivastava, founder of Global Trade Research Initiative.
However, experts cautioned that it is not clear how long these exemptions will last, and whether they will continue for India – a country towards which Trump has taken an unusually hostile tone in recent days.
“There is not much clarity on whether previously spared sectors (globally), such as pharma, electronics, energy, and minerals, would continue to be exempted for India too,” said a report by Emkay Global Financial Services that delved into the impact of the 25% US tariff and an as-yet-unspecified penalty for importing Russian oil that Trump announced on Wednesday.
According to the report, the sectoral vulnerabilities are not as bad as feared as long as the exemptions stay. Pharma and electronics have been exempt from any tariffs so far, while auto is better-placed than feared (as India barely exports vehicles to the US, while auto components may eventually benefit from tariffs on China, Canada, and Mexico).
The electronics exemption proves particularly valuable given India’s transformation under the production-linked incentive scheme. The ₹1.97 lakh crore programme for large-scale electronics manufacturing, launched in April 2020, has converted India from a net importer to the world’s second-largest mobile phone manufacturer by value, generating ₹5.45 lakh crore in production and ₹2 lakh crore in exports during 2024-25. ₹1 lakh crore is equal to $12 billion.
Traditional export sectors, however, face greater vulnerability, with experts saying traditional Indian merchandise such as gem and jewellery, textiles, and leather goods may take a hit.
Apparel Export Promotion Council chairman Sudhir Sekhri acknowledged challenges while maintaining cautious optimism: “The tariff of 25% is higher than what we expected but we should not be overly worried as long as Vietnam and Bangladesh tariffs are not revised downward from current levels.”
The US represents a crucial market for Indian readymade garments, accounting for about 33% of India’s total garment exports. Sekhri expects “apparel exports to slow down till the announcement of an interim BTA, hopefully to conclude in October-December 2025.”
Legal experts advised enhanced contract protection for the volatile period ahead. “Indian exporters and importers must have watertight agreements for at least this financial year so that the risk in terms of currency fluctuation, price increase, tariff escalation, and contract cancellation are in place. Further, there must be a mandatory arbitration clause with the place of arbitration to be outside the US,” said Abhishek A Rastogi, founder of Rastogi Chambers.
“We await clarity on whether key sectors will remain exempt, as well as the announcement of a ‘mini’ trade deal in due course,” the Emkay report concluded.
