Apple has unveiled its latest iPhone 16 lineup, alongside the new Apple Watch and AirPods, all slated for release on Sept. 20. This development marks a significant shift as Apple will produce the iPhone Pro models in India for the first time, a strategic move aimed at diversifying its supply chain from China. India, with its ambitious goal to become a global hub for consumer electronics manufacturing, stands to gain substantially from this shift.
Apple’s strategic pivot to India has intensified over recent years. When a Chinese factory halted production due to lockdown-related protests during the Covid-19 pandemic, major delivery delays ensued. In response, Apple began accelerating its efforts to diversify, mirroring moves by other tech giants like Microsoft and Amazon. This shift is not only a response to past disruptions but also a strategy to mitigate the risks posed by geopolitical tensions.
Expansion in India
Foxconn, Apple’s largest contractor, announced plans for a $1.5 billion investment in Tamil Nadu, Karnataka, and Telangana to facilitate the assembly of the iPhone 16 Pro and Pro Max models in India. Foxconn currently produces two-thirds of the iPhones manufactured in India. Tata Group, the first domestic manufacturer of iPhones, has pledged to build India’s largest factory for producing Apple products.
Government Incentives
The Indian government has introduced substantial subsidies to entice Apple’s manufacturing partners to set up plants in the country. These incentives include a “production-linked incentive” scheme that offers revenue-based annual payouts to manufacturers like Foxconn for up to five years. Such incentives help mitigate the high fixed costs associated with building new manufacturing facilities, with the scheme expected to disburse up to $20 billion over five years.
Geopolitical tensions between China and India since a 2020 border dispute have also influenced Apple’s decision. India has banned several Chinese-owned companies and imposes high tariffs on Chinese electronics, including iPhones manufactured in China. These tariffs have complicated Apple’s efforts to increase its market share in India, where demand for premium products is growing among the rising middle class. Despite these challenges, Apple reported a 33 percent increase in sales in India for the 12-month period ending in March.
Apple’s first retail store in India opened in 2023, and despite holding only 6 percent of the country’s smartphone market, CEO Tim Cook sees “huge opportunity” in India. The company aims to produce a quarter of all iPhones in the country within the next four years.
India’s potential as a manufacturing hub for Apple’s products appears promising, thanks to both the Indian government’s supportive policies and the country’s rising market demand. As Apple continues to navigate geopolitical challenges and supply chain disruptions, this shift signifies a pivotal restructuring in global manufacturing strategies. For readers, understanding these strategic moves provides insight into how major tech companies are adapting to global economic and political shifts.
