Apple’s decision to manufacture its most expensive models of iPhones – the Pro and Pro-Max versions – in India is being consicered as a significant milestone for the company as well as country, which is leaving no stoneunturned to capture a sizeable share of global electronics manufacturing market.
The move not only reflects Apple’s increasing confidence in India’s manufacturing capabilities, but also establishes the country as one of the promising and reliable electronic manufactiring hubs in the world. The decision, however, has far reaching impact, influencing Apple’s operations, India’s economic landscape, and the global market dynamics.
India has been steadily establishing itself as as a reliable manufacturing hub, bolstered by the government’s “Make in India” initiative and Production-Linked Incentive (PLI) schemes aimed at boosting local manufacturing. Untill now, Apple has been manufacturing only the older and entry-level models of iPhones in India, but the inclusion of the Pro and Pro Max models will help it to win the confidence of other companies which has been maintaining distance with India for higher-value production.
Apple’s move to produce its top-tier iPhones in India is a testament to the country’s fast-emerging manufacturing sector. Companies have started looking India as a viable alternative to China for high-tech manufacturing, and Apple’s decision signals a major vote of confidence in India’s capabilities. Once the production kicks off, it would be just a matter of time when thousands of new jobs would be created and the local supply chain would successfully attract new investments. All of it will boost India’s economy significantly.
So, what factors have played a key role in influencing Apple to manufacture its premium iPhone Pro models as well in India?
The Production Linked Incentive (PLI) scheme, a initiative by the govenrment of India to encouraging companies for local manufacturing, have been instrumental in attracting global electronics giants like Apple. As a part of this scheme, financial incentives are provided to companies manufacturing their products locally. This will have a direct impact on the pricing strategy of products being manufactured in India. It has made India an attractive destination for companies looking to diversify their manufacturing bases. According to government reports, the PLI scheme is expected to bring in investments worth $10 billion in the next five years and generate around 200,000 jobs in the electronics sector.
For long, Apple has been exploring every possible way to reduce the price of iPhone models in a price-sensitive country like India by cutting the corners. The company has apparently found PLI as an effective tool to meet the objective. Apple’s export target under PLI was $10 billion, to be achieved by 2024-25. Apple achieved the target one year earlier, in 2023-24 itself.
The company’s decision to manufacture the most expensive iPhones in India has a far reaching impact as well. It is likely to encourage other high-end electronics companies to explore synergies in India. This could trigger a broader shift in the global electronics manufacturing landscape, with India emerging as a key hub for premium electronics production.
Impact on Apple’s Global Strategy
The increaing challenges for Apple in China has also played a role in Apple’s decision to increase made-in-india iPhone production. The rising labour cost, strict Covid-19 lockdowns and, the most important, the ongoing US-China tradewar has bought Apple’s supply chain in China under pressure. As a result, the iPhone maker is steadly increasing its reliance on India – the safe heaven for all the foregion companies.
In 2023-24, around $14 billion worth of iPhones were produced in India, which was 14 percent of its global production. One in seven iPhones manufactured in the world was manufactured in India.
Additionally, Apple has been losing market share in China to domestic players like Huawei, Xiaomi, and Vivo for the last few months as homegrown players have become increasingly competitive in both innovation and pricing.
By shifting production of its most expensive iPhone models to India, Apple is not only mitigating risks associated with overdependence on China but also aligning itself with global trends of supply chain diversification. This move is likely to reduce the impact of potential disruptions in China and provide Apple with greater flexibility in managing its global operations. On one hand, manufacturing in India could help Apple optimize costs due to lower labor expenses, which may enhance its margins on the high-end iPhone models. On the other hand, it will also allow the company to bring China back on negotiation table and walk away with more favouring deals that would help the company to deal with teh rising competition from homegrown smartphone companies more effectively.
Implications for China and the Global Smartphone Market
Once Apple shifts a considerable number of high-end iPhone production to India, China’s position as the world’s factory would bcome even more weaker, and be under threat.
Many experts believe that decision also hints at Apple’s preparing for a future where it is less dependent on Chinese manufacturing. This is particularly significant as Apple has been putting all eggs in one basket by historically reling only on Chinese factories for the production of its most advanced products, due to the highly developed manufacturing ecosystem in the country.
As Cupertino-giant beefs up production of iPhone in India the competition between India and China would also intensify, with India emerging as a viable alternative for high-tech manufacturing. For China, Apple’s efforts to shifting production to its neighbouring country could have broader economic implications, as the iPhone maker plays a cruicial role in the China’s export economy. Moreover, as Apple diversifies its manufacturing footprint, other tech companies may follow suit, further diminishing China’s share of the global electronics manufacturing market.
Also, as Apple faces increasing competition from Chinese homegrown smartphone manufacturers this strategic move becomes even more strategic for the iPhone maker. Companies like Huawei, Xiaomi, and Vivo have not only captured significant market share in China but have also expanded aggressively into international markets, challenging Apple’s dominance. It’s the first time when Apple failed to secure a spot in the list of top 5 smartphone vendors in China.
By diversifying its manufacturing base, Apple is not only safeguarding its supply chain but also positioning itself to better compete with these rivals on a global scale.
Conclusion: A Win-Win Scenario
Apple’s decision to manufacture its most expensive iPhones in India is a strategic win for both the company and the country. For Apple, it represents a critical step towards supply chain diversification, cost optimization, and risk mitigation. For India, it signifies a major boost to its manufacturing sector, further strenghtening its presence in the global electronics market.
The move also has broader implications for the global smartphone market, particularly in the context of rising US-China tensions and the shifting dynamics of global manufacturing. As Apple continues to reduce its dependency on China, we may see other tech giants follow suit, leading to a more distributed and resilient global supply chain.
