Apple Inc could potentially double its iPhone production in India to over $30 billion within two years, driven by potential tariffs on Chinese imports by US President Donald Trump. Trump's prior tariffs on Chinese goods and a similar strategy in a second term could elevate India as a major manufacturing hub. This shift may create 200,000 jobs and boost India's share in iPhone production to over 26%. The move hinges on Trump's actions and India's reforms to ensure production remains in the country.
Apple Inc has the potential to double its annual iPhone production in India to over $30 billion within the next two years, according to officials and industry experts, spurred by the possibility of significant tariffs on Chinese imports proposed by US President Donald Trump.
Currently, Apple manufactures iPhones worth approximately $15-16 billion in India each year. During his campaign, Trump had threatened tariffs ranging from 60-100% on goods imported from China. If Trump follows through on imposing hefty tariffs, Apple could capitalize on this opportunity to escalate its operations in India.
In his previous term, Trump implemented a series of tariffs on Chinese imports. A similar strategy in his second tenure could position Apple as a leading manufacturing player in India, noted officials. The potential return of Trump is anticipated to impact the Indo-US relationship across strategic, defense, and trade dimensions.
"While some areas might experience setbacks, India stands to gain significantly, particularly in electronics, notably in iPhone production," mentioned an official speaking on condition of anonymity.
Trump's prior actions included tariffs as high as 25% on Chinese goods. Should Trump enforce these tariff threats on Chinese exports to the US, Apple might consider shifting a substantial portion of its iPhone production to India. This expansion could generate around 200,000 jobs and elevate India's share in the iPhone production ecosystem to over 26% within the next few years from the current 12-14%.
Despite Apple's silence on queries, Neil Shah, Vice President at technology researcher Counterpoint Research, expressed optimism, stating, "With the rising demand for premium iPhones globally and the manufacturing of the iPhone Pro series in India, the production value could potentially surpass $30 billion annually in the coming years."
However, the extent of iPhone manufacturing relocation to India hinges on Trump's future actions post his official assumption of presidency. It also relies on the Indian government's ability to enact substantial reforms to address persistent cost inefficiencies and policy uncertainties stemming from taxes and tariffs, ensuring that the additional production remains in India rather than shifting to other countries like Vietnam.
Apple's yearly iPhone sales amounted to $201 billion in the fiscal year ending on September 30, constituting 51% of its total revenue of $391 billion. Despite relocating 12-14% of iPhone production to India over the past three years under the Indian government's smartphone production linked incentive (PLI) scheme, over 85% of iPhones are still manufactured in China.
As India emerges as Apple's secondary global iPhone manufacturing hub, the company is rapidly expanding its operations in the country, which is also the second largest smartphone market worldwide.
Apple currently engages three companies—Foxconn, Pegatron, and Tata Electronics (formerly Wistron)—to manufacture iPhones in India. Approximately 70% of the locally produced iPhones are exported to various countries, including the US.
The Tata Group is establishing a second iPhone production facility in Hosur, Tamil Nadu, expected to employ up to 40,000 individuals. This plant is slated to commence operations in the upcoming months. Officials anticipate potential tariffs on Chinese exports by the US government within a year, giving Apple roughly 12 months to scale up its manufacturing capabilities in India. Nevertheless, experts caution that such a transition may present challenges, as India has not previously experienced such high-volume production for exports. Despite this, the Indian government remains positive about the electronics manufacturing prospects.
During a recent press briefing, Foreign Minister S. Jaishankar remarked, "We in India view this as an opportunity. Having missed the manufacturing wave in the 1990s and early 2000s, we see this supply chain realignment as a chance for a fresh start. Beginning with Apple, we aim to perform better than before."
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