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As Apple rethinks China, India is in the spotlight. But is it ready?

Upstox Originals

As Apple rethinks China, India is in the spotlight. But is it ready?

Namita Salgia.jpg

By Namita Salgiya

8 min read | Updated on April 26, 2025, 10:40 IST

SUMMARY

Trump’s tariff could hit Apple hard. Amidst rising tariffs on China, Apple has ramped up iPhone production in India by 60%, signalling a shift away from China. With 20% of global iPhone output coming from India, Apple is quite bullish on India. But the key questions are: Is India ready to seize this opportunity? Can India become the next iPhone factory? Can India replace China in global tech manufacturing? This article offers a reality check on India’s manufacturing readiness.

As Apple rethinks China, India is in the spotlight. But is it ready?

As Apple rethinks China, India is in the spotlight. But is it ready?

Think your latest smartphone is made in China?

Probably not!

99.2% of mobile phones sold in India now bear the ‘Made in India’ tag.

Not only have the volumes gone up, but India has also climbed up the value chain. The manufacturing value of mobile phones has jumped to ₹4.2 lakh crore in FY24 from ₹18,900 crore in FY14.

India is now the world’s 2nd largest mobile manufacturing country. That’s huge!

Not long ago, India relied heavily on importing electronics and critical mobile components. But now things are changing!

India is boosting its domestic capabilities

India's electronics manufacturing ecosystem is strengthening, and it now manufactures even critical mobile components such as chargers, battery packs, camera modules, display assemblies, microphones and speakers.

Here’s a stat that shows just how far India has come.

India imported ₹300 billion worth of mobile PCBAs (Printed Circuit Board Assemblies) in FY18 — fast forward to FY24, and that number has dropped to zero.

And very soon (yes, in 2025), India will also have its first ‘Made in India’ semiconductor chip rolled out.

Now here’s the kicker…

India didn’t just cut imports, it also flipped the script.

Today, smartphones are among the top exported goods from India.

Mobile phone exports from India, which were a mere ₹15.7 billion in FY15, have now crossed an all-time high of ₹2,000 billion in FY25. That’s a 128x growth in a decade.

Source: PIB and MoneyControl

And guess what’s the major contributor to India’s mobile exports?

Well, it’s the Apple iPhone, with a ₹1.5 trillion (₹1.5 lakh crore) share in exports.

India’s iPhone output has soared

Today, 20% of Apple’s global iPhone output comes from India, i.e. 1 out of every 5 iPhones is now ‘Made in India’. Analysts believe that this number will rise to 50% soon. That’s an impressive leap from 2017, when India barely featured in Apple’s global production map.

Apple has ramped up its iPhone production in India by 60% from the previous year, assembling $22 billion (₹1.89 lakh crore) worth of iPhones in FY25.

Apple’s increased focus on India also signals a shift away from China. There was a time when China assembled every single iPhone. But now, a small but significant percentage of iPhone production happens in India.

But now, with the trade war between the US and China, Apple is looking for a different plan. And India fits the bill.

We’ll come to how and why of it, but before that, let’s answer those who are wondering:

If Apple had to shift production to another country, why not the US?

You see, it’s not that simple! While an iPhone is designed in the US, its components and assembly come from over 43 countries. A single iPhone contains hundreds of individual parts, which come from different suppliers in different countries.

To give you some idea, the camera comes from Japan, the battery comes from China, the display comes from Korea, the accelerometer comes from Germany, semiconductor chips come from Taiwan and so on.

The point is, it’s an assembled gadget that needs to be pieced together. And to do that, Apple needs a network of specialised suppliers, a trained workforce, engineering know-how and most importantly, the scale to pull this off. And, the US lacks all of it!

Just so you know, the Chinese city Zhengzhou is popularly referred to as "iPhone City" because its iPhone factory produces 5 lakh iPhones a day!

This is the scale that the US needs, and that’s a problem!

But that’s not the only challenge!

Rebuilding the entire supply chain and infrastructure in the US would take years and cost billions. And the US doesn’t have the cost advantage either. An iPhone made in the US could cost 3 to 5 times more than it would in China.

Let’s just look at the labour cost. Assembling and testing the iPhone costs $40 per iPhone in China, but a whopping $200 in the US!

Source: Mint

But now, with all the tariffs coming into play, sourcing an iPhone in the US from India could prove to be 20% cheaper compared to China.

But the question is:

Is India ready to become Apple’s next China?

While some things work in India’s favour, there are also broader-level challenges.

Let’s take it from the top!

What works for India?

Great local demand

You see, China is the biggest smartphone market in the world and the second biggest for iPhones. However, Apple is not even one of China’s top five smartphone brands.

India, on the other hand, has a growing local market for iPhones. Apple featured among the top five smartphone brands in India for five consecutive months, with an 11.4% market share in January 2025.

Source: IDC India monthly smartphone tracker, March 2025

Just look at the numbers.

Apple sold over 3 million iPhones in India in Q1FY25, registering a 35% YoY growth.

Very soon, India may become Apple’s 3rd largest market globally.

Large workforce

India also has a vast labour pool, especially in the tech and electronics sectors. It can easily fulfil Apple’s manufacturing and production needs. Plus, India’s low-cost labour can reduce Apple’s overall cost.

Growing iPhone exports

As mentioned earlier, India exported ₹1.5 trillion (₹1.5 lakh crore) worth of iPhones in FY25, registering a 76% YoY jump led by Apple’s contract manufacturers such as Foxconn, Tata Electronics and Pegatron. India’s massive export drive is proof of its rising capability.

Government support

India is rapidly emerging as a global manufacturing hub for electronics. The value addition in electronics manufacturing increased from 30% to around 70% and is projected to reach 90% by FY27.

This is possible because of supportive government policies. For context, the government disbursed ₹8,700 crore under the PLI scheme to boost electronics manufacturing, with Apple partners receiving nearly 75% of those subsidies.

Additionally, the government has rolled out the Electronics Component Manufacturing Scheme with an outlay of ₹22,919 crore to broaden the electronics manufacturing ecosystem in India.

Besides that, India will soon sign a bilateral trade agreement with the US, which will help us boost exports, attract more investment, deepen supply chain integration, address tariffs and increase market access.

Apple is bullish on India

With all of these capabilities and strengths, Apple is bullish on India. That’s precisely why Foxconn, Apple’s key contract manufacturer, is investing in mega facilities and expanding its operations in India. Even Tata Electronics has taken over Wistron’s and Pegatron’s facilities to become a major iPhone supplier.

However, all is not rosy. As mentioned earlier, there are challenges in this journey.

What is holding India back?

The biggest problem is India’s poor spending on research and development. It spends a mere 0.64% of its GDP on R&D far behind China’s 2.6%, Germany’s 3.1% and South Korea’s 4.9%.

Apple currently has R&D facilities in the US, China, Germany and Israel. In 2024, Apple set up a subsidiary in India named Apple Operations India, focusing on R&D. Thus, if Apple decides to move beyond assembling in India, then it will face problems.

Another issue is India’s weak innovation ecosystem. Let’s accept it—India’s innovation hasn’t picked up pace. And without strong IP protection, it’s hard for India to compete with global tech companies.

What adds to the woes is Apple’s complex supply chain. You see, iPhone is only being assembled in India, with parts flown in from other countries. India doesn’t manufacture most of the components, which means it doesn’t have control over the high-end supply chains. And, this can become a big problem!

That’s not all!

The tax rate for foreign companies in India is as high as 40%. They also find themselves entangled in a web of varying surcharges and cesses. Moreover, taxes and regulations keep changing frequently in India, which adds to the complexity.

Lastly, labour productivity is low in India compared to global standards. However, the good thing is that it’s showing a positive trend in recent years.

Long story short

India certainly stands to gain from the reconfiguration of global value chains. In recent years, it has shown remarkable progress in its smartphone manufacturing capabilities. Apple and other tech giants have also shown confidence in India by shifting their supply chains.

But let’s accept it. Right now, India may not be able to compete with China's huge manufacturing ecosystem. However, as it strengthens its manufacturing capabilities and works on the existing issues in the coming few years, there is a good chance it will close that gap and emerge as the next big tech giant.

For now, it’ll be interesting to see how this growth shapes up!

About The Author

Namita Salgia.jpg

Namita Salgiya is a CA-turned-writer with over 10 years of experience across leading BFSI brands and media houses. With her in-depth research and analytical skills, Namita creates insightful content on financial markets, mutual funds, economy, business and personal finance.

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