The proposed 25% tariff on semiconductors by US President Donald Trump is unlikely to affect India’s semiconductor industry due to two key reasons.
First, India’s semiconductor ecosystem is still in its early stages, and the country does not currently export chips. Second, even as India develops its chip manufacturing and assembly ecosystem in the coming years, it will primarily operate under a “chip manufacturing-as-a-service” model. This means chips produced in India will cater to global clients, not just the US.
At present, five semiconductor projects are underway in India, including an assembly, testing, marking, and packaging (ATMP) unit by Micron, a fabrication and OSAT unit by the Tata Group, and OSAT units by Kaynes and CG Power.
Although Indian semiconductor firms receive orders from US clients, experts believe the proposed tariffs —still under discussion — will not cause immediate disruptions. Moreover, the US will take time to build its domestic chip manufacturing capabilities, they noted.
Experts said that India’s semiconductor industry must expand its customer base beyond the US to maintain a strong business. With India’s semiconductor demand projected to rise, the domestic market itself presents significant opportunities.
“There is no short-term burden on India. In the long run, some impact could be seen on India’s own branded chip products once companies reach the export stage — provided US tariffs remain,” said Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA).
Chandak added that imposing tariffs on semiconductors could disrupt global supply chains, ultimately affecting US companies and consumers due to the challenges of ramping up domestic production overnight.
Echoing this view, Satya Gupta, president of the VLSI Society of India, noted that trade restrictions between countries are detrimental to the global semiconductor industry. “Many large fabless semiconductor companies are based in the US, and a significant portion of their revenue comes from Asia. If Asian countries respond with tariffs, it could impact their business and raise the bill of materials (BOM) costs for products like mobile phones worldwide,” he explained.
India’s semiconductor manufacturing is expected to operate primarily under a contract manufacturing model, meaning chip ownership will remain with companies from the US, Europe, Japan, and other regions. As a result, India is unlikely to face immediate repercussions.
Notably, major US fabless companies such as Qualcomm, AMD, and Nvidia count China among their largest markets, reinforcing the global interdependence of the semiconductor industry.
Meanwhile, Micron, a US-based firm, is set to produce its first India-assembled chip this year. If exporting to the US becomes costlier, experts suggest the company could explore alternative export markets from India, particularly for its memory chips.
According to IESA, India’s semiconductor market is projected to grow from $52 billion (Rs 4.5 lakh crore) in 2024 to $103.4 billion (Rs 9 lakh crore) by 2030.
