India is currently navigating a “shrimp vs. smartphone” dilemma as US tariffs force a re-evaluation of its export strategy. While technology-intensive goods like smartphones enhance export value and represent “sunshine industries,” labor-intensive sectors like textiles and agricultural produce remain the backbone of the economy, employing millions of people through MSMEs.
Trump-era tariffs have disproportionately targeted these labor-intensive sectors, with duties as high as 50%, while technology goods have largely remained exempt. This has led to a significant shift in India’s export mix; high-tech exports to the world have more than doubled since 2013, now making up over 20% of the total. Smartphones have been a primary driver of this growth, particularly in shipments to the US.
Despite the growth in high-tech exports, India remains heavily dependent on imports for critical intermediates like semiconductor chips and solar cells. Experts argue that for India to reach its $1 trillion export target, it must foster a deeper manufacturing ecosystem that moves beyond simple assembly to producing high-value intermediates and components domestically.