The Covid-19 pandemic has unlocked a world of mind-boggling opportunities in India, captivating both businesses and job seekers. Amidst this transformative landscape, the electronic import-export industry has undergone a revolutionary change, with India now reigning as the global hotspot for smartphone manufacturing. Notable industry giants like Apple and Samsung have taken notice, establishing their manufacturing units in the country over the past three years. What’s truly captivating is the spectacular outcome of this shift: in May 2023 alone, Apple iPhone exports from India skyrocketed to a staggering ₹10,000 crore, propelling the total smartphone exports for the country to an impressive ₹12,000 crore.
It is important to note that the current state of smartphone production in India primarily involves an assembly process rather than full-scale manufacturing. This localized assembly process involves importing various smartphone components and then assembling them within the country before exporting the finished devices to other nations.
While India’s long-term goal is to establish a complete manufacturing ecosystem for smartphones, the term “manufacturing” is used broadly by the government of India to promote made-in-India initiatives, aimed at promoting locally-made smartphones. These efforts have been instrumental in fostering the growth of India’s smartphone industry.
iPhone becomes a symbol of India’s export success
In May 2023, India’s exports of electronic goods surged a whopping 73.96%, reaching $2.42 billion, compared to $1.39 billion in May 2022. During the two months (April-May 2023), electronic goods exports from India totalled $4.54 billion, exhibiting a remarkable growth rate of 48.06% in comparison to $3.06 billion in April-May 2022.
Smartphones rank as India’s fifth largest export item, trailing behind auto diesel fuel, diamonds, turbine fuel, and petroleum products. In just the first two months of the fiscal year 2024, smartphone exports from India have surged past ₹20,000 crore ($2.4 billion), an astounding leap from the ₹9,066 crore recorded in the same period last year. Apple, a key member of the India Cellular and Electronics Association, has played a pivotal role in this exponential growth, further solidifying its presence in the Indian market.
Undeniably, the iconic iPhone has symbolised India’s export prowess. Interestingly, Apple iPhones now constitute a remarkable 80% of the total smartphone exports from India.
The projected figures for iPhone exports from India in FY24 are poised to surpass the remarkable $5 billion (₹40,000 crore) achieved in FY23. This remarkable achievement sets Apple apart as the first single smartphone brand to accomplish such a feat.
Apple has significantly increased its focus on India as a manufacturing hub, aiming not only to cater to the export market but also to meet the growing demand for premium devices within the country. As part of its efforts to diversify its supply chains, the Cupertino giant is now exploring the possibility of manufacturing AirPods within India. Can you imagine the thrill of having these iconic devices made in the very heart of the country? This move not only reinforces India’s growing importance in Apple’s global operations but also highlights the country’s potential as a hub for cutting-edge technology manufacturing.
Samsung, Xiaomi and a few local brands are gearing up to make a splash in the international market this year by exporting a substantial number of smartphones manufactured/assembled in India.
Contributing Factors to Apple’s Success in India
India is considered one of the most attractive markets in the world for global companies due to several factors. Firstly, the country offers comparatively lower manufacturing costs, including cheaper labour costs, making it an economically viable option for businesses. Secondly, India’s population is on the rise, presenting a substantial consumer base for various industries, including the smartphone market. Additionally, India’s smartphone market is relatively untapped, with significant potential for growth and expansion.
Prior to the Covid-19 pandemic, Apple encountered a range of challenges in India, including issues with pricing, lack of carrier subsidies, limited local language support, custom duties on iPhones, and infrastructure related to financial transactions. While some of these challenges have been addressed, others still persist. However, Apple’s CEO Tim Cook and his team are diligently working to overcome these obstacles and attract more Indian customers. They are committed to finding solutions and ensuring a seamless experience for Indian consumers. With their proactive approach, Apple aims to strengthen its presence in the Indian market and provide customers with the best possible Apple ecosystem.
The seismic shift away from China as a dominant manufacturing base can be attributed to a combination of geopolitical tensions between the United States and China and India’s smartphone production-linked incentive (PLI) scheme.
The Indian government introduced the Rs 40,995-crore Production-Linked Incentive (PLI) scheme in April 2020, aiming to boost the local production of smartphone devices, attract foreign investments, and generate employment opportunities in India. Since its announcement, the government has been actively encouraging both local and global mobile OEMs, including Apple and Samsung, to increase their manufacturing operations within the country.
Under the PLI scheme, companies that meet certain criteria and achieve predetermined production targets are eligible to receive incentives in the form of cash subsidies or other benefits. These incentives aim to offset the additional costs incurred by companies during the manufacturing process and encourage them to expand their production capabilities within India.
As Apple increasingly focuses on India, it forges a path that other American companies could potentially follow, reshaping the global supply chain landscape in the process. The result? India’s rise as a powerhouse in the global tech landscape.
However, things are not as smooth as it seems for Apple, Inc. In a recent development, Wistron, the first iPhone manufacturer in India, decided to exit the iPhone manufacturing business. The blame rests on Apple’s tough price negotiation tactics, which Wistron cites as the primary obstacle preventing them from achieving profitability. This unexpected development sheds light on the challenges Apple faces in the Indian market.
Tesla’s arrival in India is imminent
As the Indian delegation accompanies Prime Minister Narendra Modi on his highly anticipated state visit to the US from June 21-24, all eyes will be on the success story of Apple in India.
Indian officials are eagerly eyeing Apple’s expanding presence in India as a shining example. They hope to sway other US companies, including the illustrious Tesla, to follow suit and redirect their supply chains to India. It’s a daring aspiration that showcases India’s determination to become a hub for global businesses.
The goal is crystal clear: fortify and bolster supply chains, with a special focus on critical emerging technologies such as semiconductors and electric vehicles.
With multiple industry engagements and captivating discussions on the horizon, the Indian delegation is primed to ignite excitement and explore opportunities in critical emerging technologies and supply chains. Will India’s ambitious endeavours further revolutionize the global tech landscape and secure its position as the ultimate destination for cutting-edge innovations?
