Winning Bizness Desk
Mumbai. Apple CEO Tim Cook recently revealed that half of all iPhones sold in the United States are now being manufactured in India. In an interview, Cook said that starting in the April-June quarter, India will be recognized as the "country of origin" for a significant share of iPhones sold in the US. Meanwhile, other Apple products like AirPods and Apple Watch continue to be produced largely in Vietnam.
Tariff Benefits Driving Shift from China
The strategic move comes as Apple looks to reduce its reliance on China due to rising tariffs. While importing from China draws higher duties, India and Vietnam offer a more favorable tax regime, with only a 10% import tax. The lower tariff structure is a major reason Apple is prioritizing manufacturing in these countries over China.
US-China Trade Tensions Accelerate Move
Apple's shift is also a response to intensifying trade tensions between the US and China. Following the imposition of reciprocal tariffs during the Trump administration, Apple began reducing its manufacturing footprint in China. Cook acknowledged that the March quarter saw only limited disruption due to Apple’s proactive efforts in relocating its supply chain to India and Vietnam.
Massive Scale-Up Expected by 2026
According to the Financial Times, Apple’s local production in India could exceed 60 million units annually by 2026 if the current shift continues. This would effectively double the present production capacity in India. Currently, the bulk of global iPhone manufacturing still resides in China, accounting for 28% of total shipments in 2024, as per IDC. However, Apple's relocation strategy is set to drastically reduce this dependency.
Production and Exports Surge in 2024-25
From March 2024 to March 2025, Apple produced iPhones worth \$22 billion (approx ₹1.88 lakh crore) in India, marking a 60% jump from the previous year. Of this, \$17.4 billion worth of iPhones were exported. Now, every fifth iPhone globally is made in India. The manufacturing units are based in Tamil Nadu and Karnataka, with Foxconn leading the charge, followed by Tata Electronics and Pegatron.
India's Market Potential and Policy Support
Apple’s focus on India is driven by multiple factors: cost-effective labor, favorable government incentives like the Production Linked Incentive (PLI) scheme, and growing local demand. The iPhone remains a luxury item in India, yet Apple’s sales reached \$8 billion in FY24, despite having just 8% market share. The rising middle class is expected to fuel future growth. Moreover, India’s infrastructure and workforce are improving, with training and large-scale investments from partners like Foxconn, which is setting up a \$2.7 billion plant in Karnataka.
Key Points
1. 50% of iPhones sold in the US are now made in India.
2. India set to become the official country of origin for US-bound iPhones by mid-2024.
3. Tariff advantages over China and Vietnam are driving this shift.
4. Apple plans to produce over 60 million iPhones annually in India by 2026.
5. iPhone production in India grew by 60% in one year, reaching \$22 billion in value.
6. Foxconn, Tata, and Pegatron are leading Apple’s manufacturing efforts in India.
7. Apple benefits from India’s lower costs, policy incentives, and growing domestic market.
