India’s telecom equipment exports have been rising steadily. It currently exports radios, routers and network equipment, among other equipment –  to more than 100 countries, with several homegrown companies making a mark in overseas markets. A closer look at India’s current telecom export and import values reveals some interesting insights. As per the International Trade Centre’s Trade Map, Indian telecom equipment exports (under HS Codes 8517, 8525, 8544 and 9001) have been on an upward trajectory, growing from $5.36 billion in 2020 to $24.9 billion in 2024. Meanwhile, the value of telecom imports has risen relatively slowly during this period, from $15.65 billion to $21.49 billion, reversing India’s trade balance in telecom equipment from negative to positive.

However, this scenario could change with growing headwinds in India’s key export markets in the wake of recent global trade developments. With the US imposing tariffs on imports and the European Union (EU) introducing the Carbon Border Adjustment Mechanism (CBAM) and proposing anti-dumping duties, India needs to recalibrate its telecom equipment export strategy.

Key telecom export markets

The US

In 2024, the US was the top destination for Indian telecom exports, which stood at $7.92 billion. However, recent tariff announcements by the US Administration could change that status. The US Administration announced a uniform 10 per cent duty on all incoming foreign goods starting April 5, 2025. It also announced that, from April 9, 2025, it would impose reciprocal tariffs, with import levies equal to those charged by the respective country on American goods. For India, this would translate into a “discounted” 26 per cent duty, similar to that for the EU (20 per cent), South Korea (25 per cent) and Japan (24 per cent). The rates for some other countries were much steeper; for instance, 54 per cent, 46 per cent and 36 per cent for China, Vietnam and Thailand respectively.

Subsequently, the US announced a pause of 90 days on the implementation of reciprocal tariffs for all countries except China, although the 10 per cent baseline tariff remained intact. Eventually, smartphones too were exempted from this policy. More recently, the US came up with a “non-tariff cheating” list, warning its trade partners against non-tariff-related offenses (such as currency manipulation, export subsidies, counterfeiting and transshipping) that could jeopardise relations with the US.

How will these developments impact Indian exports? Industry experts believe that telecom will be among the worst-hit sectors, given that tariffs on telecom exports to the US could shoot up from 0 per cent to 26 per cent (India imposes a 10-20 per cent basic customs duty and a 10 per cent surcharge on imports of telecom products from the US). While smartphones have been excluded from tariffs, other telecom equipment including optic fibre cables (OFC), transmission apparatus for radio telephony, polarising materials and lenses are still under the tariff purview.

Another possible threat is foreign telecom equipment vendors relocating their production base to the US in order to avoid these tariffs. This development is likely to increase operational expenses and decrease the competitiveness of Indian firms. In light of the recent policy shifts, India must expeditiously conclude the ongoing negotiations for a bilateral trade agreement (BTA) with the US and explore more favourable terms in the potential BTA with the US.

Europe

The EU is the second key destination for Indian telecom equipment exports. In 2024, the top importers of Indian telecom equipment in Europe were the Netherlands ($2.54 billion), the UK ($1.76 billion), Italy ($1.38 billion), the Czech Republic ($1.26 billion) and Austria ($0.92 billion). Smartphones, telecom sets and other phones remained the most exported commodity.

However, Indian telecom exports could face challenges in the EU market. In June 2024, the European Commission (EC) proposed imposing anti-dumping duties on OFC exports to Europe. This means that key OFC companies could pay additional duties ranging from 8.7 per cent to 11.4 per cent. The EC is expected to hold consultations and legal proceedings in this regard over the next six months. While a final decision is awaited, these levies, if implemented, could escalate Indian OFC export costs, making them less competitive in the EU.

Another challenge that India faces is with regard to the introduction of the CBAM. This carbon tariff mechanism threatens to squash Indian exports of carbon-intensive commodities.

The two trading partners are making efforts to iron out the creases and align their priorities. The EU and India are currently engaged in free trade agreement (FTA) negotiations. Among other things, both sides are committed to establishing safe, secure, trustworthy, human-centric, sustainable and responsible artificial intelligence. Further, the Bharat 6G Alliance and the EU 6G Smart Networks and Services Industry Association signed an MoU in June 2024 to align research and development priorities and develop secure and trusted telecommunications and resilient supply chains.

India is also exploring an FTA with the UK. Interestingly, the UK is keen to explore more opportunities for its services in India, in segments such as telecommunications. As of February 2025, academia and industries in the UK and India are advancing research in 6G, optical, satellite and non-terrestrial networks under the UK-India Future Networks Initiative. Further, an MoU was signed between the Centre for Development of Telematics (C-DOT) and Sonic Labs. Among other things, it includes the promotion of the indigenous 4G/5G telecom stack developed by C-DOT.

The road ahead

In the context of the recent developments, India needs to take a fresh look at its telecom export market strategy. The Production-Linked Incentive (PLI) scheme, which has been a major growth driver in India’s telecom equipment sector, could play an enabling role in this.

Launched in 2021 with an initial outlay of Rs 121.95 billion across five years, the PLI scheme covers 33 telecom and networking products. Initially, 31 companies were approved under the scheme for incentives ranging from 4 per cent to 7 per cent for various categories and years. The scheme offers an extra 1 per cent incentive for micro, small and medium enterprises for the first three years. In 2022, the scheme was modified and an additional 1 per cent incentive was offered to support manufacturing based on design. A total of 42 companies, including Samsung, Dixon Technologies, HFCL, Jabil, Flextronics, Sanmina, Rising Star, Nokia and Tejas Networks, were included under the scheme. Over the years, the PLI scheme has enabled self-reliance in the sector and led to an import substitution of 60 per cent. According to the communications ministry, the scheme has generated Rs 149.63 billion in export sales, as of January 31, 2025.

India now needs to evaluate how to sustain the growth momentum it has built steadily over the years. One approach for the sector is to diversify its export basket to markets with more favourable trade environments. The sector could also pivot from merely assembling raw materials to exporting higher value solutions, such as clean energy telecom products, to mitigate the impact of policies such as the CBAM. Finally, India must negotiate its trade agreements with an understanding of the volatilities in the current global trade landscape.

Nikhaar Gogna