India's smartphone exports to the US nearly doubled to $19.7 billion in FY26, helping total goods exports reach $87.3 billion. This growth helped offset declines in other product categories impacted by new US trade tariffs. Investors should monitor how ongoing US trade policy reviews and shifting global supply chains affect long-term production incentives in India.
Detailed Coverage
India’s export relationship with the United States showed notable shifts in the fiscal year 2025-26. According to a policy analysis by the Indian Council for Research on International Economic Relations (ICRIER), total goods exports to the US recorded a modest growth of 0.9%, reaching $87.3 billion. This resilience was largely driven by a massive surge in smartphone shipments, which rose to $19.7 billion from $10.6 billion in the previous year.
Impact of Global Supply Chain Shifts
The sharp increase in smartphone exports is directly linked to the 'China+1' strategy, which has seen global technology giants like Apple scale up manufacturing operations within India. As US trade policy and geopolitical tensions have intensified, China’s share of smartphone imports into the US dropped significantly, falling from 81% in 2024 to 45.2% in 2025. This transition has allowed India to capture a larger portion of the US market, serving as a primary beneficiary of the redirected manufacturing flows.
US Tariff Regime and Export Performance
The trade landscape was complicated by the US reciprocal tariff regime, which came into effect on April 2, 2025. While this policy introduced a 10% baseline tariff, India faced a specific reciprocal tariff of 26%, which has seen various revisions. The ICRIER data highlights a divergence in performance based on these tariff lists. Products that were exempted from these additional duties saw a strong 24.5% increase in exports, rising to $36.6 billion. In contrast, goods subject to the tariff regime experienced an 11.2% decline, totaling $50.7 billion.
Ongoing Regulatory Scrutiny
Investors should be aware that the trade environment remains dynamic. On March 11, 2026, the US Trade Representative (USTR) initiated investigations into the manufacturing policies of 16 nations, including India. The objective of this probe is to identify potential issues related to structural excess capacity and overproduction that may affect US manufacturers. While findings regarding India are currently pending, this investigation remains a key monitorable. Any future policy adjustments resulting from this probe could influence the stability of export-oriented manufacturing incentives. The sustainability of this growth will ultimately depend on the ability of Indian manufacturers to maintain cost competitiveness and adhere to evolving international trade compliance standards.