Summary
Apple’s strategic decision to shift a significant portion of its iPhone manufacturing from China to India marks a major milestone in the global electronics supply chain. Historically, about 80% of iPhones were assembled in China, predominantly at Foxconn’s massive Zhengzhou facility, often called “iPhone City.” However, driven by geopolitical tensions, pandemic-related disruptions, and the desire to diversify supply sources, Apple has accelerated efforts to expand its manufacturing footprint in India. Partnering with contract manufacturers such as Foxconn, Wistron, and Pegatron, Apple aims to increase India’s share of global iPhone production to 32% by 2026-27, alongside capturing 26% of production value.
This manufacturing shift aligns with India’s ambitious economic initiatives, including Make in India and the Production-Linked Incentive (PLI) scheme, which have created an attractive environment through financial incentives and relaxed regulatory requirements. Apple’s expansion in India began with older models like the iPhone SE and iPhone 6s, and now includes recent flagship devices such as the iPhone 15, which meet global quality and compatibility standards. The growing production capacity has already elevated India’s iPhone manufacturing value to approximately US$14 billion as of fiscal year 2024, with projections reaching US$18 billion by 2025.
Despite these promising developments, Apple’s India manufacturing strategy faces significant challenges. Infrastructure constraints, complex regulations, and quality control remain critical concerns that could affect production efficiency and timelines. Additionally, earlier policy uncertainties and regulatory changes sparked investor apprehensions, though recent government adjustments have improved transparency and reduced operational burdens. Geopolitically, this move reflects broader efforts by multinational corporations to reduce dependency on China amid ongoing trade tensions and the lingering impacts of the COVID-19 pandemic.
Apple’s expansion into India is expected to have substantial implications for the global technology and manufacturing industries. It not only diversifies Apple’s supply chain but also bolsters India’s role as an emerging electronics manufacturing hub, potentially attracting further foreign investment and stimulating local economic growth through job creation and skill development. While China remains Apple’s dominant manufacturing and sales market, India’s rising importance signals a transformative shift in global production dynamics and may encourage other companies to consider similar supply chain realignments.
Background
Apple’s journey in global iPhone manufacturing has been deeply influenced by its long-standing partnership with Taiwan-based Foxconn, the world’s largest electronics manufacturer with twelve factories across China. This relationship, which began to blossom in the late 1990s, has been central to Apple’s production strategy, with approximately 80% of iPhones historically assembled in Foxconn’s massive Zhengzhou facility, often referred to as “iPhone City”. However, over the years, Apple has increasingly explored diversifying its manufacturing footprint beyond China.
In recent times, Apple has made significant strides toward expanding iPhone assembly operations in India. This move is driven by both strategic and economic considerations, including supply chain resilience and the desire to tap into India’s growing electronics manufacturing ecosystem. Several of Apple’s suppliers, including Foxconn, Pegatron, and Wistron, currently operate assembly plants in Indian states such as Tamil Nadu and Karnataka, with Wistron notably ramping up hiring at its Bengaluru facility in preparation for local assembly of newer iPhone models like the iPhone 12.
Apple and its suppliers aim to substantially increase India’s share of global iPhone manufacturing, targeting 32 percent of global output and 26 percent of production value by 2026-27. This ambitious plan reflects India’s push to enhance its electronics supply chain capabilities and integrate more deeply into global value chains, while offering Apple operational flexibility and mitigating risks associated with over-reliance on Chinese manufacturing. Nonetheless, the transition has not been without challenges, as infrastructural constraints and regulatory hurdles in India have posed difficulties in scaling production efficiently and maintaining quality standards.
Decision to Move Manufacturing to India
Apple’s decision to shift part of its iPhone manufacturing to India marks a significant strategic move driven by multiple factors. One primary reason for this transition is the desire to diversify its supply chain, reducing dependence on a single country amid geopolitical tensions and disruptions caused by the COVID-19 pandemic. By expanding production to India, Apple aims to mitigate risks associated with over-reliance on China, its previous manufacturing hub.
The Indian government’s proactive role in promoting technological growth and manufacturing has been instrumental in attracting Apple. Offering a range of incentives such as reduced import duties and financial benefits, India has created an appealing environment for global tech giants. Apple currently collaborates with contract manufacturers like Wistron and Foxconn for local assembly, and plans to scale up production through these partners.
This move is also aligned with India’s broader strategic initiatives, including programs like Make in India and Sagar Mala, aimed at boosting domestic manufacturing capabilities and integrating the country more deeply into global value chains. Experts view this as a major opportunity for India to develop a robust tech ecosystem, create jobs, and enhance skill development among the local workforce.
However, challenges remain, including infrastructure limitations and regulatory hurdles that Apple must navigate to ensure consistent quality and timely production. Additionally, changes in global trade policies, such as potential U.S. tariffs on Chinese-made mobile devices, could further accelerate Apple’s shift towards India. If successfully managed, this transition could position India as a key player in Apple’s global supply chain and a growing hub for electronics manufacturing.
Production Details
Apple’s shift of iPhone manufacturing to India has been a gradual but significant process, with production ramping up steadily since the first locally assembled models. The original iPhone SE was the first iPhone made in India, followed by the assembly of the iPhone 6s in 2018 and the iPhone 7 in 2019, both produced at Wistron’s Bengaluru plant. These early models were older and more affordable devices, aligning well with the price-sensitive Indian market. Subsequently, more recent and popular models such as the iPhone XR and iPhone 11 have been assembled at Foxconn’s Chennai facility, reflecting Apple’s expanding footprint in the country’s manufacturing sector.
By fiscal year 2024 (FY24), the value of iPhone production in India reached approximately US$14 billion. Projections indicate that this figure will rise to around US$18 billion by FY25, which corresponds to a market value—including distribution and dealer margins—of roughly US$27 billion. This increase underscores Apple’s strategic efforts to diversify its manufacturing base and reduce dependency on China as the primary production hub.
The Indian government has also played a key role in facilitating this transition through ownership and sourcing regulations. Foreign brands like Apple are required to source at least 30% of the products sold locally within India. Recent policy adjustments now allow exports to count towards this 30% local sourcing requirement, providing further incentives for Apple to increase its manufacturing investments in India. Additionally, changes have been made to improve regulatory transparency and reduce burdens on manufacturers, including involving industry representatives in decision-making and easing information disclosure requirements.
Despite these advancements, challenges remain. Infrastructure constraints and regulatory hurdles could impact the pace and quality of production. Maintaining consistent manufacturing standards and adhering to timelines will be critical for the success of Apple’s India operations.
The ongoing production in India now includes the latest models such as the iPhone 15, which are manufactured to the same global standards and maintain full international network compatibility. This ensures that iPhones made in India can be used seamlessly worldwide, reflecting Apple’s commitment to quality and uniformity across its manufacturing locations.
Impact on the Industry
Apple’s decision to shift a significant portion of its iPhone manufacturing to India has notable implications for the global tech and manufacturing industries. This move is driven by the need to diversify Apple’s supply chain and reduce its heavy reliance on China, a strategy influenced by recent geopolitical tensions and the COVID-19 pandemic which exposed vulnerabilities in concentrated production hubs.
The ramp-up in Indian production is expected to reshape the electronics supply chain both locally and globally. Apple and its suppliers aim to have 32 percent of global iPhone manufacturing and 26 percent of production value coming from India by 2026-27. This expansion will likely enhance India’s position in the global value chain and stimulate significant foreign investment opportunities in the country’s technology sector.
India’s government has played a crucial role in facilitating this shift by introducing favorable policies such as the production-linked incentive (PLI) scheme. Recent adjustments to the PLI rules—such as allowing exports to count towards local sourcing requirements and reducing onerous regulatory demands—have made it more attractive for Apple and other smartphone manufacturers to invest in Indian production facilities. These incentives encourage Apple to increase its manufacturing footprint, further accelerating the development of the local supply chain.
The growth in iPhone production within India is expected to have a broader economic impact by creating numerous jobs and fostering skill development among the Indian workforce. It also benefits ancillary industries and local suppliers, contributing to the growth of a robust tech ecosystem.
Despite these developments, China remains a dominant manufacturing and sales market for Apple. However, the increasing export value of India-made iPhones—up nearly a third to about $6 billion over six months—demonstrates the rapid growth and growing importance of India in Apple’s global manufacturing strategy. This trend may encourage other global tech companies to reconsider their manufacturing bases, potentially triggering a broader realignment of the industry’s supply chains away from China toward emerging hubs like India.
Moreover, major contractors like Foxconn continue to maintain significant operations in China while simultaneously expanding in India, signaling a dual-strategy approach to managing production risks and meeting global demand. Overall, Apple’s shift to Indian manufacturing is poised to have a transformative impact on the technology manufacturing landscape by diversifying production locations, stimulating economic growth in India, and altering global supply chain dynamics.
Challenges and Criticisms
Apple’s strategic shift of iPhone manufacturing to India, while offering significant opportunities, has encountered several challenges and criticisms. One major concern relates to infrastructural limitations and regulatory hurdles within India. These obstacles could potentially disrupt production timelines and affect the consistent quality of the devices, which are critical factors for maintaining Apple’s global standards and market competitiveness.
Additionally, the transition has prompted debates regarding the role and treatment of investors in the new manufacturing scheme. Earlier policies allowed the empowered committee to unilaterally change rules after a company had started production, which investors found troubling. Recent revisions now include representatives from the smartphone manufacturing industry in discussions prior to any further changes, addressing concerns over unpredictability and business risks. Moreover, adjustments such as the removal of a clause linking incentive release to government budget availability and the reduction of excessive business information demands have been implemented to ease operational burdens on manufacturers.
From a geopolitical and economic perspective, Apple’s move reflects a broader effort to reduce dependence on China amid global tensions and pandemic-related disruptions. However, the United States remains constrained by a lack of low-cost labor and specialized manufacturing workforce necessary to bring production back home, complicating the landscape further. Speculation around potential punitive tariffs on Chinese-produced mobile devices, proposed to be as high as 60 percent by former President Donald Trump, suggests that India and other countries like Vietnam may gain a competitive edge in the global tech supply chain. This evolving dynamic has both amplified the urgency and highlighted the complexities of Apple’s manufacturing realignment.
Future Prospects
Apple’s expansion of iPhone manufacturing in India signals a transformative shift in the global smartphone production landscape. By aiming to assemble 32 percent of global iPhone output and 26 percent of its production value in India by 2026-27, Apple is strategically reducing its reliance on China and diversifying its supply chain to enhance resilience and operational flexibility. This move not only reflects India’s growing technological capabilities but also highlights the effectiveness of government initiatives like Sagar Mala and Make in India in attracting multinational investments.
The ramp-up in Indian production is expected to create significant economic benefits, including job creation, skill development, and the strengthening of local suppliers and ancillary industries, thereby fostering a more robust tech ecosystem within the country. Projections for the fiscal year 2025 suggest that iPhone manufacturing in India could reach a production value of approximately US$18 billion, with a market value nearing US$27 billion.
Despite these promising prospects, challenges remain. Infrastructure limitations and regulatory complexities pose potential obstacles that Apple must navigate to maintain consistent quality and meet production timelines. Moreover, while India’s role in Apple’s manufacturing network is growing, China continues to dominate in terms of volume and sales, and India is unlikely to surpass China as Apple’s primary market in the near future.
The broader implications of Apple’s shift could encourage other technology giants to consider India as a viable manufacturing hub, further integrating the country into global value chains and boosting foreign investment opportunities. However, attempts to relocate iPhone production back to the United States face significant hurdles, including the lack of low-cost labor and specialized manufacturing workforce, underscoring India’s unique position in the current global manufacturing environment.
The content is provided by Jordan Fields, Scopewires
