Easing US-China trade tensions a red flag for India? Electronics sector warns; cost edge may shrink by ‘10 percentage points’

India’s electronics sector could face a setback as trade tensions between US and China have eased after the Busan meeting between the presidents of two nations ended with ‘great success’.The electronics sector has raised alarm over potential threats to its global competitiveness after the tariffs on Chinese goods were reduced. The industry has urged the government to continue the supportive measures to deal with the impact. The US had recently cut fentanyl tariffs on China from 20% to 10%, effective from November 10, after a marathon discussion between US President Donald Trump and Chinese President Xi Jinping on October 30. Industry leaders have cautioned that this move narrows the cost advantage India has gained in the international market, ET reported. In a November 6 letter to the government, the India Cellular and Electronics Association (ICEA) highlighted the concern, noting that the tariff reduction has “sharply narrowed India’s relative cost advantage by 10 percentage points.” The association further added that “if sustained or further relaxed, this development could materially affect India’s export competitiveness, investment attractiveness and production momentum under the production linked incentive (PLI) scheme.” ICEA, which represents companies such as Apple, Google, Motorola, Foxconn, Vivo, Oppo, Lava, Dixon, Flex and Tata Electronics.The electronics sector has emerged as one of the biggest successes of the Make in India initiative. The association also pointed to wider global trade dynamics. With the US offering China more favourable terms, the country, long seen as America’s main trade rival, may no longer face a tariff disadvantage relative to India and other exporters. This shift is partly aimed at curbing inflation within the United States.