Apple Aims To Produce a Quarter of iPhones in India
MONDAY, SEPTEMBER 9 — Just a few hours ago, Apple released its latest iPhone 16 Pro model, which will be partially manufactured in India for the first time ever. This is a major step towards the Cupertino smartphone behemoth's goal to have 25 percent of iPhones manufactured in India in the next four years and a win for Indian leaders who want their nation to become a global leader in electronics production.
In 2017, Apple began manufacturing older versions of iPhones in India for local consumers in an attempt to diversify its supply chain from China. This effort was exacerbated during COVID-19, when a Chinese factor spontaneously seized production, causing major delays in iPhone deliveries to customers during the 2022 holiday season. Apple is hardly alone in diversifying away from China; Microsoft and Amazon have moved some of the Xbox and Fire TV manufacturing to India and Vietnam, respectively.
Another incentive to shift manufacturing to India is the ongoing freeze in China-India relations, stemming from a 2020 border dispute. This conflict led India to ban several Chinese companies, including TikTok, from operating in the country. India also imposes high tariffs on Chinese electronics and technology products. Despite India’s ambitions to integrate into the global manufacturing supply chain, the unresolved border tensions make normalization of relations unlikely. As a result, tariffs can cause Chinese-manufactured products, like the iPhone, to be more expensive in India than in the U.S., posing challenges for companies like Apple in reaching India’s expanding consumer market. Apple’s India sales grew 33 percent year-over-year in the 12 months ending March 2024 to $8 billion, making it a promising growth opportunity for the American technology company.
In 2023, Foxconn announced a $1.5 billion investment in the southern Indian state of Tamil Nadu, a $600 million plant in the state of Karnataka, and a $500 million plant in Telangana state. The state-of-the-art factories allow Apple to build iPhone 16 Pro and Pro Max models in the country for the first time ever. Foxconn, a Taiwanese electronics manufacturer, is a long-time supplier of Apple, and now makes 67 percent of the iPhones built in India.
Foxconn’s investments ushered in a massive change in Apple’s supply chain. Bloomberg reported in April 2024 that Apple doubled its production to $14 billion worth of iPhones built in the country in the most recent fiscal year compared to the year before. Now, 1 in 7 iPhones sold globally are made in India.
Apple’s future in India looks optimistic. Indian conglomerate Tata Group, the first domestic manufacturer of iPhones, has promised to make India’s largest factor for producing Apple products. At the same time, Indian leaders have put their money where their mouth is by offering generous subsidies to Apple’s manufacturing partners to build plants in the country. Apple launched its first retail stores in India in 2023, and despite holding only 6% of the Indian smartphone market, CEO Tim Cook called India a "huge opportunity" in a June 2023 interview with CNBC.
