Explainer: How Donald Trump's trade war with China could turn into India¡¯s big break in manufacturing, iPhone exports & global market

U.S. President Donald Trump imposed tariffs on Chinese goods to a staggering 145 percent, and now a country like India has found itself in a curious position. While India itself faced a steep 27 percent tariff on its exports to the U.S., the harsher measures imposed on China suddenly made India look like a better deal. For years, India has aimed to present itself as a viable alternative to China¡¯s manufacturing dominance. With the trade war in full swing, that dream feels closer¡ªyet still fraught with old challenges.

A seeming advantage, but are we ready?

While Trump's 27 percent tariff on Indian exports caused concern, Indian officials and business leaders remained cautiously optimistic. Compared to the 145 percent slapped on Chinese goods, India¡¯s situation seemed manageable, even advantageous. Praveen Khandelwal, a BJP Member of Parliament and a prominent figure in Indian business circles, described it as a significant opening for India¡¯s trade and industrial sectors.

Donald Trump with Chinese President Xi Jinping | Credit: X

However, when comparing in reality this optimism must be weighed against reality. India has long attempted to compete with China by boosting its manufacturing capabilities. According to The New York Times, under Prime Minister Narendra Modi¡¯s ¡°Make in India¡± initiative, the government has invested over $26 billion in incentives for manufacturers. The plan aimed to reduce dependence on Chinese imports and create 100 million new jobs by 2022. Yet, even with some progress, India¡¯s manufacturing share in the economy has declined from 15 percent to below 13 percent over the past decade.

Apple¡¯s iPhones are a start, but the bigger picture is complex

A key success story has been Apple¡¯s manufacturing shift. Taiwanese firm Foxconn, which assembles iPhones, has started moving production from China to India. In Tamil Nadu, a cluster of Apple suppliers now reportedly handle about 20 percent of global iPhone production. Ahead of Trump¡¯s tariff announcement, exports from Tamil Nadu¡¯s main airport spiked as companies rushed shipments to the U.S.

PM Modi with US President Donald Trump | Credit: X

At present it can be looked upon as that while India may increase its share to 30 percent of iPhone production globally, replicating China¡¯s manufacturing ecosystem at scale remains a tough task. The Indian government has improved infrastructure and streamlined some regulations. But critical gaps in workforce skills and inter-regional connectivity can still limit the country¡¯s full potential.

Opportunity meets old obstacles

As per the findings of The New York Times, at the Rai Industrial Estate near New Delhi, factories stand on land that once grew wheat and mustard. Some units here, like LiKraft, which produces lithium-ion batteries, have been operating for years. Others are just starting. Vikram Bathla, who founded LiKraft in 2019, said that the core challenges they face are the: lack of skilled workers. His company imports most of its tech from China, from cells to machinery, but struggles to find workers capable of handling high-tech tasks.

Workers at LiKraft, most of them migrants, start with Chinese-made cells and operate imported machines to produce batteries labelled ¡°Made in India.¡± Despite the label, the supply chain remains largely foreign. In nearby factories, the story is similar. AutoKame, which makes car seat covers, depends on raw materials from overseas and operates imported machines from Europe.

Policy, power and the fear of courts

Many of these manufacturing units run into the same set of problems: expensive land, inconsistent policies, and limited financing. Anil Bhardwaj, head of a manufacturing trade body, pointed out that India¡¯s legal system also creates hurdles. Smaller firms are reluctant to scale due to fear of litigation and biased rulings that favour large companies with better legal access. With over 50 million cases pending, India's clogged judicial system is another obstacle in the path to industrial growth.

Donald Trump with PM Modi | Credit: X

Still, there has been progress. Power supply has improved, particularly in areas like Haryana. Some processes have become more efficient under Modi¡¯s administration. But these improvements haven¡¯t been enough to inspire confidence among smaller manufacturers who still battle red tape and regulatory uncertainty.

Can India truly compete?

There¡¯s no doubt that Trump¡¯s trade war with China has opened a door for India. But translating this advantage into a long-term gain depends on India¡¯s ability to address deep-rooted structural issues.

While large players like Apple are ramping up production, smaller firms struggle with outdated systems, skill shortages, and policy unpredictability. Unless these long-standing issues are resolved, India risks letting this rare chance slip by.

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