Electronics Makers Increase Component Imports From Vietnam Amid Rising Domestic Prices

Electronics manufacturers in India, particularly smartphone and true wireless stereo (TWS) earbud makers, have increasingly turned to imports from Vietnam following a nearly fivefold spike in memory chip prices over the past year. Industry sources indicate that this trend is expected to accelerate further.

Under the India-ASEAN Free Trade Agreement, import duties on most items from Vietnam are set at zero. Over the past year, companies have utilized this duty-free structure to bulk-import smartphone components, including displays and camera modules, alongside finished Bluetooth earbuds.

According to industry insiders, a significant portion of these importers are Chinese companies that operate manufacturing or assembly units within India. Some firms have opted to import TWS earbuds directly from Vietnam because it is more cost-effective than domestic manufacturing, while others have chosen to establish production facilities in Vietnam instead of India.

Official data highlights the growth in this trade corridor. India’s electronics imports from Vietnam rose by 9.5 percent year-on-year to $5,364.61 million in FY26, up from approximately $4,896 million in FY25. This follows a 16.1 percent growth in FY24, when imports reached $4,504 million compared to $3,879 million in FY23.

Industry observers note that while schemes such as the Mobile Phone Manufacturing Scheme and the Electronic Components Manufacturing Scheme offer a 4 percent incentive for setting up display manufacturing units in India, the availability of zero-duty imports from Vietnam often creates higher margins, potentially impacting domestic manufacturing policies and government customs revenue.

Importing these goods involves preferential tariff rates under the ASEAN–India Trade in Goods Agreement (AITIGA). By meeting specific Rules of Origin and providing a valid Certificate of Origin, importers can bypass standard Most Favored Nation tariffs, which typically range from zero to 20 percent for most electronics.

"The shift toward importing components from Vietnam highlights the complex trade-offs companies face between domestic production incentives and immediate cost efficiency. While zero-duty frameworks under the ASEAN agreement offer strong short-term margin benefits—especially during periods of high memory chip prices—policymakers and industry leaders must carefully evaluate how this impacts long-term domestic manufacturing growth and the goals of local production schemes." — Dr. Shishir Gupta, Founder & CEO, StartupLanes