Motorola ramps up India manufacturing to bypass US tariffs on China

Amid rising US tariffs on Chinese imports, Motorola shifts to India for cost-effective labour and favourable policies, making it a top choice for smartphone manufacturing and export growth

Motorola is significantly scaling up its smartphone manufacturing in India, aiming to nearly double its annual output from 13 million units to 23-30 million units in the next fiscal year. This expansion is part of the company’s broader strategy, leveraging India’s Production Linked Incentive (PLI) scheme and reinforcing the country’s position as a global manufacturing hub. A substantial portion of the increased production will be exported, with the United States identified as a key market, according to the India Cellular and Electronics Association (ICEA).

The move comes as the US government imposes higher tariffs on Chinese imports, including smartphones, prompting brands like Motorola to explore alternative manufacturing bases. India, with its cost-effective labour and favourable government policies, has emerged as a preferred destination. Motorola’s manufacturing partner, Dixon Technologies, has reported robust growth in orders, with monthly production exceeding 1 million units. “The order book looks strong for the coming months,” said Atul Lall, Managing Director of Dixon Technologies.

Export surge amid tariff risks

Currently, Motorola exports 20-25% of its Made in India smartphones, approximately 2.2 million units, to North America. This figure is expected to surge to 12-18 million units in the next fiscal year, driven by the PLI scheme and the need to circumvent rising manufacturing costs in China. However, the company is closely monitoring potential US tariffs on Indian imports, which could take effect from April 2. If the US imposes a 16.5% tariff on smartphones imported from India, Motorola may reduce its production target to 8-10 million units and shift some operations to Vietnam, where tariffs remain at 0%.

Industry leaders are urging the Indian government to negotiate favourable trade terms with the US to maintain the competitiveness of Indian exports. Discussions are underway to reduce import duties on US electronic goods, which could help sustain India’s position as a leading smartphone manufacturing hub.

India rivals China in manufacturing

Motorola’s expansion aligns with India’s broader ambitions to become a global manufacturing powerhouse. The success of this strategy, however, hinges on trade negotiations, tariff policies, and cost competitiveness. If India can secure favourable trade agreements, it could further strengthen its position in the global smartphone export market, attracting more investments from international brands.

As Motorola navigates these challenges, its increased focus on manufacturing in India underscores the country’s growing importance in the global supply chain and its potential to rival traditional manufacturing giants like China.