India’s smartphone exports to the United States, its largest market, have nosedived by 58% in August 2025, plummeting to $964.8 million from $2.29 billion in May, according to a report by the Global Trade Research Initiative (GTRI). This alarming contraction—despite smartphones remaining tariff-free—has sparked calls for urgent probes into underlying factors like weakening US industrial demand and supply chain disruptions. For exporters, policymakers, and market analysts searching India smartphone exports US decline 2025, GTRI export report August, or US tariffs impact India, the drop underscores vulnerabilities in India’s $24.1 billion global smartphone export ecosystem, where the US accounts for 44% ($10.6 billion in FY25). As overall merchandise exports to the US contracted 22.2% to $6.9 billion in August, tariff-exempt goods like phones bore the brunt, falling 41.9%. Let’s examine the data, drivers, and road ahead.
The Sharp Decline: Data Breakdown from May to August
GTRI’s analysis, based on US Commerce Department figures, reveals a steady monthly erosion in smartphone shipments—the sector’s largest US export category. The fall accelerated despite India’s PLI scheme boosting assembly (e.g., Apple, Samsung shifting from China), which propelled exports to overtake China’s in Q2 2025 (44% US import share).
- May 2025: $2.29 billion (peak amid pre-tariff rush).
- June: Gradual dip to ~$1.8 billion (est.).
- July: Further slide to ~$1.3 billion.
- August: $964.8 million—58% below May.
This isn’t isolated: Tariff-free exports (28.5% of August total) crashed 41.9% from $3.37 billion in May to $1.96 billion, while tariffed labor-intensive goods (62.7% share) fell 10.8% to $4.30 billion.
| Month | Smartphone Exports to US ($ Million) | Overall US Exports ($ Billion) | Key Note |
|---|---|---|---|
| May 2025 | 2,290 | 8.8 | Pre-tariff Peak |
| August 2025 | 964.8 | 6.9 | 58% Drop; 22.2% Overall Decline |
| FY25 Total (Est.) | 10,600 (44% Global) | – | Pre-Drop Baseline |
Root Causes: Beyond Tariffs to Demand and Supply Woes
The decline defies expectations—no tariffs on smartphones yet a counterintuitive slump. GTRI attributes it to “decreased US industrial demand rather than market loss,” amplified by phased tariffs on other goods (10% until Aug 6, 25% until Aug 27, 50% post-Aug 28).
- US Demand Slowdown: Industrial contraction and inventory buildup post-Q2 surge (India overtook China at 44% US imports).
- Tariff Spillover: Even exempt, phones face indirect hits from ecosystem tariffs (e.g., components, textiles down 9.3%).
- Supply Chain Hiccups: Global chip shortages and PLI delays; competitors like Vietnam gaining share.
- Broader Trends: Pharma (-15.9%), seafood (-43.8%), and chemicals also dipped, signaling macro pressures.
GTRI founder Ajay Srivastava warned: “This demands urgent investigation—India’s position in its largest market is at risk.”
Impacts: Ripple Effects on Economy and Exporters
The 58% plunge threatens India’s export ambitions:
- Economic Hit: Smartphones drove 44% of FY25 US exports; further erosion could shave 0.5-1% off GDP growth.
- Job Risks: PLI scheme created 100,000+ jobs; slowdowns at Foxconn, Pegatron may idle workers.
- Trade Balance: US deficit widened; EU (29.5% share) can’t fully offset.
- Investor Sentiment: Shares of Dixon Tech (-3%) and Amber Enterprises (-2%) dipped on news.
Exporters like Karbonn and Lava face margin squeezes, prompting calls for incentives and diversification to UAE/Africa.
| Sector | May-Aug Decline (%) | Value Impact ($ Million) |
|---|---|---|
| Smartphones | -58 | -1,325 |
| Tariff-Free Goods | -41.9 | -1,410 |
| Labor-Intensive | -10.8 | -520 |
| Overall Exports | -22.2 | -1,900 |
Pathways Forward: Probes, Diversification, and Policy Tweaks
GTRI urges:
- Immediate Review: Export promotion, PLI enhancements, and market access audits.
- Diversification: Boost to EU, Middle East; explore FTAs.
- Government Response: Commerce Ministry monitoring; potential subsidies for exporters.
As Srivastava noted, “Stabilize shipments to safeguard India’s edge.” With Q3 data pending, recovery hinges on US demand rebound.
Conclusion: A Wake-Up Call for India’s Export Engine
India’s 58% smartphone export drop to the US in August 2025 isn’t tariff fallout—it’s a symptom of demand droughts and ecosystem strains, threatening the PLI-fueled boom. As GTRI demands probes, exporters must pivot fast. For those tracking India US trade 2025 or smartphone export outlook. ET
