Apple’s expanding presence in India is projected to generate up to 600,000 jobs by the end of the fiscal year, underscoring the company’s significant efforts to diversify its production away from China. The expansion is part of Apple’s broader strategy to bolster its manufacturing capabilities in India, driven by production-linked incentive (PLI) schemes offered by the Indian government.
According to a Bank of America research report, Apple is anticipated to increase its iPhone production in India to more than 18% by FY25, up from just 7% in FY23. This shift is being propelled by the PLI targets, which aim to enhance India’s role in the global supply chain for electronics and mobile phones.
Amish Shah, managing director and head of India research at Bank of America, highlighted that India’s growing manufacturing sector could become a viable global supply chain alternative. “We believe India could emerge as a credible alternative for mobile phone and electronics production,” Shah noted. “The success of Apple’s expansion could lead to broader shifts in global supply chains and improve India’s macroeconomic outlook.”
The anticipated increase in Apple’s production share in India could further benefit from the expansion of Apple’s vendor network within the country. Additionally, the company has recently opened two direct retail Apple stores in India, reflecting its commitment to the market. By FY25, India could contribute over 5% of Apple’s global iPhone sales, up from the current 4%. The increased local production is expected to enhance the affordability of iPhones in India, potentially boosting Apple’s market share.
Despite these positive developments, Shah pointed out challenges in the localization of key components such as displays, memory, and chips, which constitute about 70% of the cost of mobile phones. “Localizing these components in the near term is challenging due to high capital expenditures and advanced technology requirements,” Shah explained. He also noted that India’s current production value addition stands at 18%, compared to China’s 38% and Vietnam’s 24%. However, he drew parallels with China and Vietnam, suggesting that initial focus on higher production scale helped these countries improve their value addition ratios over time.
The expansion of Apple’s manufacturing footprint in India represents a significant shift in the global electronics supply chain, with potential long-term benefits for both the company and the Indian economy. The successful implementation of PLI schemes and continued investment in local production capabilities will be crucial in determining the extent of these benefits.
