While the proposed 25% tariff on semiconductor imports by the Trump administration is expected to have a significant impact on the global chip industry, India is unlikely to experience any major short-term consequences since it is not a major semiconductor exporter to the US, industry executives said.

However, companies in India which export finished electronic goods are on a wait-and-watch mode, before committing any new investments, they said. Some said Trump’s action to put tariffs on semiconductor imports may in fact violate the Information Technology Agreement (ITA-1), an international treaty to which the US is a party to, mandating trade of semiconductors and IT goods at zero duties between signatories.

Trump Tuesday said he intends to impose tariffs “in the neighbourhood of 25%” on semiconductors, automobiles and pharmaceutical imports, the latest in a series of measures as part of his America-first trade policy. “The imposition of a 25% or higher tariff on semiconductors by the United States is expected to have significant consequences for the global semiconductor industry. This move will impact costs, supply chains, innovation and geopolitical relations, shaping the industry’s future in multiple ways,” India Electronics and Semiconductors Association president Ashok Chandak said.

However, 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, he said. Moreover, India’s import duty on semiconductors is already zero, meaning there are no reciprocal tariff concerns, he added.

Most of India’s upcoming semiconductor manufacturing facilities will cater to global brands, with the output primarily meant for domestic consumption, he said. “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.”