President Donald Trump’s dramatic announcement of a 25 per cent tariff on semiconductor imports into the US is very likely to boomerang.

The Indian Electronics & Semiconductor Association reckons that the tariff will have only a limited impact on Indian companies.

However, it is expected to hit American companies like Nvidia and Apple really hard, raising the prices of their products for US consumers.

Taiwan and South Korea currently dominate global semiconductor manufacture. The association anticipates a closer collaboration in semiconductors between Europe and Asia to build a supply chain for chips and other electronic components that will operate independent of the US. But the prospect of a reshuffle in the supply chain is unlikely in the near term.

“India is unlikely to experience any major short-term consequences due to this tariff, as it is not a major exporter of semiconductors to the US. Moreover, India’s import duty on semiconductors is already zero, meaning there are no reciprocal tariff concerns,” said IESA president Ashok Chandak.

“Most of India’s upcoming semiconductor manufacturing and Outsourced Semiconductor Assembly and Test (OSAT) facilities cater to global brands. India’s increasing domestic semiconductor demand will rely on locally manufactured chips, minimising reliance on imports. In the long run, Indian semiconductor brands will not be at a major disadvantage as the US tariff is expected to apply uniformly to all exporting nations,” Chandak said.

While companies may look to diversify their supply chains by sourcing from tariff-free regions, IESA said that such shifts is a complex and time-consuming process.

“Semiconductor fabs are among the most complex and expensive industrial facilities to build, costing between $10 billion and $25 billion per site. Companies must carefully evaluate multiple factors before making investment decisions, including talent availability, tax policies, regulatory frameworks, and environmental and labour market conditions,” said Chandak.

Taiwan partnership

To bolster trade partnerships between India and Taiwan and push the idea of self-reliance in electronics production, EPIC Foundation, a non-profit organisation founded by HCL co-founders Ajai Chowdhry and Arjun Malhotra, has signed a Memorandum of Cooperation (MOC) with Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA), a trade group that represents over 3,000 Taiwanese electrical and electronic manufacturers.

Drug makers

Indian drug makers are hoping that bilateral discussions between the country and the United States will help them steer clear of President Donald Trump’s plan to levy at least 25 per cent tariffs on pharmaceutical imports, a trade association said, according to a Reuters report.

India, which calls itself the ‘pharmacy of the world’, makes cheaper generic versions of complex innovative drugs in its massive factory clusters and exports them to over 200 countries, of which the US is its biggest market, government data shows.