Indian internet gear, cable makers risk missing out on US data centre boom
According to the management’s comments in the last two quarters, there was a contraction in the exports of HFCL Ltd, Polycab Ltd, Havells India Ltd and RR Kabel Ltd due to the strict customs duties imposed by US President Donald Trump, while the operating margins of Sterlite Technologies Ltd (STL) narrowed.
The tariffs are depriving Indian cable and internet hardware makers of a huge opportunity as American companies place orders worth billions of dollars to artificial intelligence (AI) companies to build infrastructure. The U.S. government is also expected to implement the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) program in 2021 to expand high-speed internet access.
I have Trumpimposed the highest 50% customs duty on India; This includes a 25% penalty on purchases of Russian oil. Many manufacturing products, including cables, telecommunications hardware inputs and engineering products, are subject to tax, while sectors such as pharmaceuticals and semiconductors are exempt.
Margin hit, shipments decreased
The impact was most pronounced at STL, the main supplier of fiber optic cable.
“The US tariff reset, effective midway through the second quarter of FY26, created a temporary headwind, reducing reported Ebitda (earnings before interest, tax, depreciation and amortization) by almost 760 basis points (basis points) in the third quarter of the current fiscal year, bringing reported margins to 10.3%,” STL group chief financial officer Ajay Jhanjari said during an analyst call last week. he said.
The company attributed the 300 basis point contraction in its margins in the previous quarter to US tariffs.
Jhanjari said STL has passed some tariffs on to customers and has aggressively increased production at its U.S. facility. “We still remain hopeful for an early resolution of the India-US bilateral trade agreement, which will provide a clear path for further widening of the margin.”
So far, STL has been unable to scale production at its South Carolina facility.
Still, management noted that North America’s share of STL revenue increased from 25% to 36% in the current fiscal year, attributing this to data center builds and demand for high fiber count cables.
STL’s rival HFCL said it was able to buffer itself.
Promoter and chief executive Mahendra Nahata told analysts during October’s second-quarter earnings call: “Regarding certain US court decisions and customs orders, we have been able to minimize the tariff impact on HFCL, that much I can say.” “So there is little impact on HFCL’s exports to the US, which are mostly fiber optic cable.”
The company is yet to announce its earnings for the October-December quarter.
Cable and wire manufacturer Polycab was already struggling with high copper and aluminum costs between September and December. US tariffs further reduced its revenues and margins.
“2025 marked a pivotal phase for the global economy, defined by changing trade dynamics and increasing geopolitical and tariff-related uncertainties,” Chief Financial Officer Niyant Maru said on the third quarter analyst call on Jan. 16. he said. “Rising US tariffs disrupted established supply chains and slowed global growth.”
The company’s head of strategy, Shashank Yagnik, said the tariffs weakened exports to the United States. “This remains a global issue and affects players not just in India but around the world. We are currently awaiting a final resolution on this issue.”
Polycab’s international cable business accelerates in FY25 ₹1,345 crore sales contributed 6% of its turnover. The business reported a “modest” contraction for the year, according to its annual report.
Cable manufacturer RR Kabel also reported that its share in exports would decrease by 2 points to 6%. The second quarter ended in September due to tariffs, according to a Nov. 3 earnings call with analysts.
For Export growth at Havells India was “very good” in the financial year ended March (FY25). “This year, unfortunately, we have been impacted by tariffs and there is less demand from the US market, which has also turned out to be a good export market for Havells cables,” Anil Rai Gupta, chairman and managing director of Havells India, said during an earnings call with analysts on January 19.
living hopes
Industry executives and analysts expect exports to the US to recover and hope a potential India-US trade deal will reduce tariffs.
“There is an opportunity in the US market for the Indian telecom and fiber cable industry. The market will continue to rise as there is a lot of demand for data centres, backhaul and consumer broadband,” said Siddhant Cally, research analyst at Counterpoint India. Cally said Indian companies supplying to the US will be affected by the tariffs, but delayed profit is better than no profit at all.
According to him, India continues to maintain its relative cost advantage despite the post-tariff contraction. “Over the medium term, vendors that localize manufacturing or final assembly in the U.S. will be better positioned to reduce exposure to tariffs and maintain margins, while enabling growth in other global markets to continue to scale and diversify revenue streams.”
Polycab relies on a hybrid business model in the U.S., selling both through distributors and directly to large corporate customers and easing trade route challenges to support cable exports. According to its FY25 annual report, the company is bullish on strong global order book driven by rising cable demand from renewable energy, energy infrastructure, oil and gas and data center sectors.
Havells India plans to support branding efforts in the US and the Middle East. According to its annual report, the company’s international business contributed approximately 3.7% of its total revenue in FY25.
“I think cables also offer a very good opportunity for exports. It can provide us with a good hedge against some kind of demand neutralization within the country in the coming years,” Gupta said. “So we are in this process. We are following it well.”
Gupta said the company will continue to explore more export markets for its underground cable business.
