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US President Donald Trump has escalated his economic battle with Beijing, slapping up to 245% in cumulative tariffs on Chinese imports – the most aggressive US trade action in years.
While these tariffs hit China’s key industries hard – including tech, critical minerals, and consumer goods – Trump has paused or minimized duties on most other nations, giving countries like India a rare opportunity to shine.
The latest salvo: An April 15 executive order investigating whether Chinese exports of rare earth metals and critical minerals threaten US national security – an inquiry likely to result in more tariffs. Meanwhile, China has retaliated with own duties on US goods and tightened controls over exports of key materials like gallium, germanium, and rare earths.
Why it matters
- The world’s two largest economies are deep into a tit-for-tat showdown that’s disrupting global supply chains and investor confidence. But in this chaos, India is gaining ground – as a neutral, stable, and scalable manufacturing alternative.
- While Beijing accuses the US of “threatening and blackmailing,” and analysts warn of looming recessionary risks, India is being recast as a rare haven in the storm. From tech giants rerouting production to foreign capital finding firmer footing, the country is emerging as a central figure in a reshaping of global commerce.
- Companies like Apple Inc are already shifting production. The iPhone maker assembled $22 billion worth of iPhones in India in the 12 months ending March, a 60% jump over the previous year, Bloomberg reported. That means 1 in every 5 iPhones is now made in India.
- Apple’s supply chain pivot isn’t just symbolic – it’s operational. In March alone, the company airlifted nearly $2 billion in iPhones from India to the US to preempt Trump’s tariffs, according to Reuters. Customs data shows Foxconn shipped $1.31 billion and Tata Electronics exported $612 million worth of devices.
- India’s low exposure to US trade—just 2.7% of American imports compared to 14% for China—shields it from much of the direct fallout.
Zoom in: India’s tariff-free edge
- India-made iPhones are currently exempt from Trump’s tech tariffs, unlike those made in China.
- Apple now assembles all iPhone models in India, including top-end titanium Pro versions.
- $17.4 billion worth of iPhones were exported from India in FY25, per India’s technology ministry.
- India’s share of Apple’s global iPhone production could soon hit 30%, Bloomberg reported.
- Trump’s 145% tariff wall on China includes stacked duties on fentanyl-related goods (20%), unfair trade practices (125%), and a global 10% baseline levy. But he’s made clear: China is the main target.
“The ball is in China’s court,” said press secretary Karoline Leavitt, reading Trump’s message. “China needs to make a deal with us. We don’t have to make a deal with them.”
The big picture: India’s manufacturing moment
India is seizing a unique window created by:
- Trump’s China-only trade assault
- A 90-day exemption from reciprocal tariffs
- A conciliatory trade stance, avoiding retaliation
- PM Narendra Modi’s multi-billion-dollar ‘Make in India’ incentives
The Modi government has pumped $26 billion into manufacturing subsidies, including fresh $2.7 billion incentives for electronics and semiconductors. That, plus tax breaks and infrastructure upgrades, is drawing companies eager to de-risk from China.
In contrast to China’s defiance, India’s approach has been conciliatory. Prime Minister Narendra Modi’s administration has actively sought a provisional trade deal with the US and avoided any retaliatory countermeasures. That diplomatic restraint, combined with robust domestic demand and targeted industrial incentives, has made India a far more attractive destination for companies looking to diversify production.
“India’s non-retaliatory stance and active negotiation approach has placed it on stronger footing,” said Sneha Tulsyan of Tokio Marine Asset Management.
Apple’s shift has also proven that India’s industrial ecosystem can scale – quickly. Just before Trump’s tariffs hit, Apple asked Indian authorities to cut customs clearance times from 30 hours to 6 hours at Chennai Airport. The goal: Fly out 600 tons of iPhones before penalties kicked in.
What they’re saying
“We remain overweight India in our portfolios,” said Gary Dugan, CEO of The Global CIO Office.
“India should emerge as a relative outperformer,” wrote Mahesh Nandurkar of Jefferies, who upgraded India to “overweight” in the firm’s Asia ex-Japan model.
“There is a clear case for investors to bet on India’s resilience,” said Harshad Patwardhan, CIO at Union Asset Management.
Global funds have responded fast:
- Indian bonds rallied while US and Chinese assets took hits.
- India’s Nifty 50 erased all tariff-driven losses, making it the first major global market to rebound.
- Foreign institutions have poured $25 billion into Indian markets this year.
Yes, but: Hurdles remain
As per a New York Times report, India’s breakout moment is real – but not without friction.
Despite 10 years of Modi government’s “Make in India” campaign, manufacturing still accounts for less than 13% of India’s economy, down from 15%. China’s share is around 25%.
“What we don’t have is the skilled workers to use the equipment,” Vikram Bathla, founder of Indian battery maker LiKraft, told the NYT. Most of his inputs – and machinery – are still imported from China.
Challenges include:
- Shortage of skilled technical labor
- Dependence on foreign inputs, especially for high-tech goods
- Expensive land and limited credit for small businesses
- Slow courts and red tape, which discourage scale
- Even as factories rise, many rely on Chinese raw materials and European machinery. As Anil Bhardwaj of a local trade body put it: “There is fear of big firms – and a dysfunctional justice system.”
What’s next: India’s test of readiness
Analysts say India is better positioned than peers like Vietnam or Mexico to absorb global supply chain shifts. But without structural reforms – from education to land use – India may struggle to deliver on its potential.
Still, the sentiment is strong. As Trump’s tariffs bite into Chinese exports, Apple is just the beginning. India is drawing new interest in auto parts, textiles, chemicals, and semiconductors.
“India is not insulated,” Rajat Agarwal, strategist at SocGen, told Bloomberg. “But it is relatively better positioned.”
Bloomberg Economics sees just a 0.3–0.4% potential GDP hit from the global trade war – a mild impact that could be offset by new US trade agreements currently under discussion.
The bottom line
Trump’s trade war is shaking up the global economy – and while China feels the heat, India is standing in the spotlight.
With Apple leading the way, India’s ascent as a manufacturing power is no longer hypothetical. If policymakers can smooth the road ahead, this could be India’s breakout moment on the world’s factory floor.
(With inputs from agencies)
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