US tariff hike impact on Indian IT supply chain pushing the local efforts

The US tariff situation, particularly the recent hikes on technology and hardware imports, has sent ripples through the global IT supply chain. For India, the impact has been twofold: a challenge in managing higher import costs, and an opportunity to accelerate its “Make in India” ambitions.

The latest round of US tariff hikes, some as steep as 50%, on selected goods has nudged many Indian distributors, manufacturers, and system integrators to rethink sourcing, pricing, and customer strategies.

According to M. Ramesh Ramanujam, Founder & Managing Partner, ABC Computers, a Tamil Nadu-based IT distributor, these tariffs are “not just a temporary disruption, but a catalyst for structural change in how India sources, sells, and services IT hardware.”

In this exclusive conversation, Ramanujam offers deep insights into how his company and the broader IT distribution ecosystem are adapting to the changing trade and geopolitical realities.

“The US tariff hikes, particularly the 50% levy on Indian goods, have accelerated a strategic pivot toward India as a key supply chain hub,” said Ramanujam.

Long-term supply chain shift: India as a critical hub

He believes that while this shift was initially reactive, it is now evolving into a long-term realignment. “Global companies are diversifying beyond China to hedge geopolitical risks. India’s PLI schemes and expanding electronics ecosystem position us as a strong alternative,” he explained.

However, Ramanujam also pointed to the remaining gaps: “Infrastructure bottlenecks and bureaucratic delays still exist. Policy stability and logistics investments will determine how far India can go.”

Still, optimism prevails. “India’s role in electronics assembly and software services will continue to strengthen. It’s no longer about reacting to tariffs, it’s about building resilience into the supply chain.”

Balancing hardware and services: a strategic reorientation

“The tariff-driven cost surge has forced us to rebalance our portfolio toward high-margin services,” Ramanujam shared.

While hardware distribution remains ABC Computers’ core business, the company is expanding into areas like:

• Managed IT services, including device lifecycle management and cybersecurity;

• Value-added offerings, such as cloud integration and AI-driven analytics.

“This shift mitigates margin pressure from rising hardware costs and aligns with the growing demand for digital transformation,” he said. “Hardware will stay important, but service-led bundles are the future.”

Cost absorption vs. pass-through: walking the pricing tightrope

Tariffs inevitably raise costs, but how those costs are managed defines competitiveness.

“We are partially absorbing costs to retain price-sensitive clients,” Ramanujam said. “But long-term, complete absorption isn’t sustainable. The July 2025 tipping point made that clear.”

He explained that pricing strategies now depend on the product type:

• “Low-margin products like peripherals have seen immediate price hikes.”

• “High-volume deals, such as bulk laptop orders, involve phased and negotiated increases.”

Transparency has been critical. “We’ve found that open communication about tariff impacts builds trust. Customers appreciate honesty about why prices are changing.”

Customer demand: resilient but cautious

“The initial demand shock was real,” Ramanujam admitted. “But Indian enterprises and SMEs have shown resilience. They’ve prioritised essential IT upgrades like Windows 11 transitions, while postponing non-critical purchases.”

He noted that price sensitivity remains highest among smaller businesses, while larger enterprises take a longer-term view, focusing on value and lifecycle cost rather than immediate price tags.

Interestingly, demand for refurbished equipment and leasing models has increased. “It’s a practical cost-control measure,” he said. “Customers still want to modernise, but they’re seeking flexible, affordable ways to do it.”

Inventory and sourcing adjustments: from JIT to JIC

The new tariff landscape has also changed how IT distributors handle inventory and sourcing.

“We’re moving toward a just-in-case (JIC) model,” Ramanujam explained. “That means maintaining 3–4 months of stock for critical high-tariff items like servers and networking gear.”

At the same time, diversified sourcing is becoming standard practice. “We’re reducing reliance on US components by sourcing from ASEAN and EU partners,” he said. “And we’re exploring local assembly partnerships with Indian OEMs to reduce landed costs.”

This hybrid sourcing model offers both flexibility and cost control. “In today’s environment, agility is the new efficiency,” he said.

Beyond tariffs: geopolitical currents shaping the IT landscape

Ramanujam was quick to point out that tariffs are just one piece of a larger geopolitical puzzle.

“US–China tech decoupling and visa restrictions are equally influential,” he noted. “Sanctions, oil trade disruptions, and the China–Taiwan tension affect component availability and shipping timelines.”

Talent mobility has also shifted. “With tighter H-1B rules, we’re investing in local hiring and upskilling,” he said. “At the same time, cybersecurity concerns are driving demand for more secure hardware and compliance-ready solutions.”

These overlapping factors, trade, talent, and security, are collectively reshaping the Indian IT business model. “The industry isn’t just adjusting to tariffs; it’s learning to operate in a more volatile global environment,” Ramanujam remarked.

Conclusion: India’s opportunity in a world of uncertainty

Despite global trade headwinds, India’s IT industry, particularly in hardware distribution and services integration, is emerging more resilient and self-reliant.

For leaders like M. Ramesh Ramanujam, the current turbulence is an inflexion point. “We’re turning a challenge into an opportunity,” he said. “Tariffs may raise costs, but they’ve also forced us to innovate, localise, and think long-term.”

As the global tech order continues to shift, one thing is clear: India is no longer a passive participant in the IT supply chain. It’s fast becoming a critical hub where cost efficiency, capability, and creativity converge.

Read More:

Dell empowering Indian SMBs with AI powered design and security