Amid India’s concerted efforts to position itself as a global electronic manufacturing powerhouse, Apple Inc., the tech behemoth known for its signature iPhones, is pivoting its gaze to the subcontinent, transferring a significant portion of its assembly operations previously centered in China. In the 2023-24 fiscal period, India’s smartphone exports soared to an impressive $15 billion, with iPhones constituting a dominant 65% share, roughly scaling to $10 billion—an exponential ascent from $5 billion in the preceding year.
It’s a landmark development as for the first time; an Indian entity, Tata Electronics, has been entrusted with assembling iPhones, complementing the colossal presence of Foxconn, the Taiwanese electronics contract manufacturing titan with substantial operations in India. Apple’s rapidly expanding footprint in India has not only diversified its manufacturing avenues but has also unveiled vast employment opportunities, with a noticeable uptick in female workforce participation in its assembly units. The Union Minister of Electronics and IT, Ashwini Vaishnaw, informed The Indian Express that Apple’s direct employment base in India stands at 150,000 individuals, with expectations of considerable growth. Government officials in the IT ministry project the employment prospects linked to the supply chain ecosystem to balloon to nearly 500,000 within the next three years.
As Apple spreads its wings across India, a myriad of its foreign parts suppliers are prompted to establish their operations on Indian soil. Minister Vaishnaw highlighted that foundational components of the supply chain—including camera modules, communications, power supply, and digital signal processing units—are all actively exploring manufacturing bases in India. This influx not only enhances India’s infrastructure but also powerfully stimulates the local economies, as evidenced by the new dormitories rising near Apple’s chief manufacturing site in Sriperumbudur, a mere 40 kilometers from Chennai, Tamil Nadu.
Bloomberg’s estimates suggest that every seventh iPhone sold globally in FY24 was assembled in India. The Indian government envisions that by 2028, a quarter of all iPhones globally will carry the ‘Made in India’ tag, potentially extending to accessories like AirPods. Apple’s ambition to amplify its annual iPhone production in India beyond the 50 million mark exemplifies this growth trajectory.
However, this transition isn’t devoid of challenges. Indian assembly efficiency is still catching up to Chinese benchmarks, and Apple’s suppliers confront hurdles from New Delhi’s stringent stance on mainland China companies and the rather prohibitive tariff rates on component imports. While the supplier network still shows prominence in China—with 157 contractors recorded in 2023, climbing from the previous year—the Indian supplier count has flatlined at 14, indicating the complexity of reducing reliance on China.
Nevertheless, lucrative government subsidies through the Production-Linked Incentive (PLI) scheme, coupled with the fraying US-China relations and Beijing’s stringent pandemic measures, have nudged Apple to shift a considerable share of its iPhone assembly to India. Its contract manufacturers, including Foxconn, Pegatron, and Wistron (now under Tata’s aegis), have met essential PLI benchmarks to receive substantial payouts, contributing to robust employment numbers, with Foxconn alone employing over 40,000 individuals in its Tamil Nadu plants.
The ripple effect of Apple’s expansion is tangible, as other tech giants like Google have shown interest in phone assembly in India. A growing roster of domestic contract manufacturers, including Tata Electronics, Dixon, VVDN, and Kaynes, have risen to cater to assembly demands from international smartphone brands. Minister Vaishnaw commended Indian manufacturers for their precision work adhering to global standards—a testament to the nation’s growing expertise in the complex contract manufacturing domain.
Nevertheless, India’s high import tariffs on smartphone components—which supersede those in China—have raised concerns within the industry. While protective tariffs are typical to champion domestic industries, in the absence of a robust component manufacturing base in India, such policies can impede investment. The IT ministry acknowledges the need to recalibrate tariffs to strike a balance that befits both domestic growth and international supplier attraction.
As Apple and its suppliers navigate the evolving Indian landscape, the journey ahead holds promise and challenges alike. India, poised on the cusp of manufacturing transformation, anticipates the maturing of policies and infrastructure that will consolidate its status as a formidable global electronics manufacturing hub.
