Tariff wall: Indian internet gear, cable makers risk missing out on US data centre boom

Subscribe to enjoy similar stories. US tariffs have either crimped margins or disrupted exports for Indian cable and telecom equipment makers, even as the data centre boom drives demand in the American market.

Operating margins narrowed for Sterlite Technologies Ltd (STL), while exports contracted for HFCL Ltd, Polycab Ltd, Havells India Ltd and RR Kabel Ltd since the US President Donald Trump imposed stiff tariffs, according to the management commentary over the past two quarters. Tariffs are depriving Indian cable and internet gear makers of a major opportunity, with American companies awarding orders worth billions of dollars to build infrastructure for artificial intelligence (AI) companies.

The US government is also expected to execute the 2021 $42.45 billion Broadband Equity, Access and Deployment (BEAD) programme to expand high-speed internet access. Trump has imposed the highest 50% tariffs on India, including a 25% penalty for buying Russian oil.

While sectors like pharmaceuticals and semiconductors have been exempted, many manufactured goods, including cables, telecom hardware inputs, and engineering products, are subject to the levy. The impact has been most pronounced at STL, a key supplier of the optical fibre cable.

“The US tariff reset, effective mid-quarter two of FY26, created a temporary headwind, reducing reported Ebitda (earnings before interest, taxes, depreciation and amortization) by almost 760 bps (basis points) in quarter three of the current fiscal and bringing the reported margins to 10.3%," Ajay Jhanjari, group chief financial officer at STL, said during an analyst call last week. In the previous quarter, too, the company attributed a 300-bps contraction in their margins to the US tariffs.