In a significant development, Apple is contemplating a major shift in its iPhone production, with reports suggesting that the tech giant aims to relocate 18% of its global production to India by 2025. This strategic decision is primarily driven by the Indian government’s production-linked incentive (PLI) scheme, designed to incentivize companies like Apple and its suppliers to expand their manufacturing operations within the country.
According to a recent report from Bank of America, India’s PLI scheme holds immense potential in helping the country achieve its ambitious goals. India aims to triple its domestic production to a staggering $126 billion and witness a fivefold growth in exports, amounting to $55 billion by FY26.
Apple has already taken significant steps towards increasing its iPhone production in India, with manufacturing in the country rising from a mere 1% in 2021 to 7% in 2023. Earlier speculations have also indicated Apple’s intention to manufacture 25% of iPhones sold globally within India by 2025.
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The Bank of America report sheds light on the fact that mobile phones account for 21.5% of India’s domestic demand for electronics, a sector experiencing robust growth at a compound annual growth rate (CAGR) of 15%. In FY2023 alone, India’s consumption of electronic goods reached a staggering $158 billion, showcasing an 11% CAGR growth over the FY17-23 period.
However, despite the significant demand, a considerable portion of electronic supplies is currently met through imports. India’s electronics imports in FY23 amounted to $77 billion, making it the second-largest import category and contributing to 20% of the country’s trade deficit.
One of the challenges in localizing mobile phone production in India lies in the fact that nearly 70% of the device’s cost, including critical components such as displays, memory, and semiconductors, are difficult to localize. Achieving such localization would require significant capital investment and access to cutting-edge technology.
The Bank of America report also highlights the positive impact of India’s Rs 38,000-crore PLI scheme, which has contributed to a more favorable export mix in local production. As a result of this scheme, electronic exports have grown from 16% to 25% year-on-year. These developments have positioned India as a reliable global supply chain option for mobile phone and electronics manufacturers.
Apple has been actively expanding its presence in India, recently opening its first two exclusive retail stores in Mumbai and Delhi. Apple CEO Tim Cook personally inaugurated these stores in April, signaling the company’s commitment to the Indian market. As part of its expansion strategy, Apple reportedly plans to open three additional stores in India by 2027, further solidifying its foothold in the country.
With Apple’s plans to shift a significant portion of its iPhone production to India, the country is poised to become a crucial production hub for the tech giant. This move not only showcases India’s growing stature as an attractive destination for global manufacturers but also holds the potential to boost the Indian economy and strengthen the country’s position in the global electronics market.
