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Chinese electronics component manufacturers, reeling from the US-China tariff war, are slashing prices by up to 5% as Indian companies negotiate new sourcing contracts, reports the Economic Times. This rare concession in a sector operating on razor-thin margins of 4-7% could yield savings of 2-3% for Indian fridge, TV, and smartphone makers, potentially allowing them to lower consumer prices to spur demand.
The report notes that roughly 75% of electronic components used in India are imported from China. However, the escalating tariff war—with US tariffs on Chinese goods hitting 125%—has disrupted global supply chains, slashing orders to Chinese firms. Kamal Nandi, head of the appliance business at Godrej Enterprises Group, told the publication, “Component manufacturers in China are under pressure. Prices will be renegotiated as export orders from the US slow down.”
The electronics industry typically operates on a two-to-three-month inventory cycle, with fresh orders expected from May-June. India’s reliance on Chinese imports remains stark: A GTRI report cited in the report shows FY24 electronics component imports soared 36.7% to $34.4 billion, up 118.2% from $15.8 billion in FY19.
Atul Lall, managing director of Dixon Technologies, which refreshes its inventory every 15-30 days, predicted a US demand crunch will further depress component prices. Tarun Pathak, director at Counterpoint Research, told the Economic Times that smartphone component prices will also dip due to oversupply, though not all parts are interchangeable. “Brands may partly pass it on or absorb it, depending on inventory position,” he said, noting that 75% of India’s smartphone components come from China.
India’s Push for Local Production
Chinese suppliers face additional hurdles in India, where production-linked incentives, quality control orders from the Bureau of Indian Standards, and rising import duties are boosting local manufacturing, according to the Economic Times. The India Cellular and Electronics Association projects component and sub-assembly production could hit $145-155 billion by 2030, bolstered by the newly launched Electronics Component Manufacturing Scheme. Still, critical components like chips, compressors, and printed circuit boards remain heavily imported.
As the tariff war reshapes trade, Indian manufacturers stand to gain from China’s concessions—though how much reaches consumers remains to be seen.
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