India's electronics exports face $3B hit amid US-Iran war
What's the story
India's booming mobile phone export sector, which generated $11 billion in revenue during the first half of the fiscal year, is likely to take a major hit. The ongoing conflict in Iran is expected to have a long-term impact on consumption patterns, imports, and freight transit in the Gulf region. Executives and analysts estimate that India's electronics exports could suffer a loss of $2 billion to $3 billion due to this situation.
Trade impact
Gulf region is major hub for EMS companies
The Gulf region is a major trade and consumption hub for electronics manufacturing services (EMS) companies. These firms export a large number of mobile phones to this area. Analysts from Kotak Institutional Equities have identified mobile phones as one of the top five most-affected commodities due to the ongoing conflict. They noted that exports to the Gulf and West Asia rose to $3.1 billion in FY25, accounting for 12% of India's net electronics exports.
Potential fallout
EMS firms may shift exports to other regions
The entire $3 billion export value could be impacted if the conflict continues, analysts at Kotak Institutional Equities said. EMS companies that depend heavily on mobile phone manufacturing could be severely affected in the current and next quarter. To mitigate these losses, these firms might increase exports to other regions such as the US, UK, China, Japan, Netherlands, Germany and Mexico.
Corporate impact
Other companies that could be impacted
The ongoing conflict could also affect Foxconn Technology Group (which includes Bharat FIH, Rising Stars and Yuzhan Technology India) and Tata Electronics. Both are contract manufacturers for Apple. Dixon Technologies, India's largest publicly listed mobile maker, Samsung India's in-house manufacturing and exports operations, as well as local companies Lava and Micromax's parent Bhagwati Products could also be impacted by the situation.
Financial repercussions
Dixon Technologies's revenue fell by 28% in December
Dixon Technologies's operating quarterly revenue fell by 28% to ₹10,672 crore in December due to declining sales. A senior official at the company said that the West Asia crisis could be a double whammy for them. However, Apple is not likely to face major disruptions at its India assembly lines as they cater mainly to domestic customers and those in the US.
Export stability
Samsung India not impacted yet
Samsung India, which operates what it calls "its largest mobile manufacturing factory" in Greater Noida, UP, may be affected by the ongoing conflict. However, a person familiar with Samsung's export operations said that for now, their exports from India are not impacted as their main overseas destinations are Europe and North America. Harshit Kapadia of Elara Capital said companies directly exporting to Gulf and West Asia markets could be most affected by this situation.