iPhones Become India's Top Export
iPhones have become India's largest single export item, reaching $23 billion in 2025 and surpassing diesel fuel. The milestone reflects Apple's strategic manufacturing diversification away from China and its deepening partnerships with Indian contract manufacturers. This shift is a key part of de-risking the company's global value chain.
- The Government of India's Production-Linked Incentive (PLI) scheme has been a significant driver, offering a 4-6% incentive on incremental sales of phones manufactured in the country. This policy is part of a broader "Make in India" initiative aimed at establishing the nation as a global electronics manufacturing hub. - Key Apple contract manufacturers, including Foxconn, Pegatron, and Wistron (whose Indian operations were acquired by the Tata Group), have significantly expanded their facilities in India. Foxconn is reportedly aiming to produce up to 30 million iPhones annually in India. - The diversification into India involves building a broader ecosystem beyond final assembly, with Apple incorporating more Indian companies into its component supply chain. This includes suppliers for casings, connectors, batteries, and other parts, with the supply network spanning states like Tamil Nadu, Karnataka, Maharashtra, and Uttar Pradesh. - While production is scaling rapidly, there are operational challenges. Manufacturing in India is estimated to be 5 to 10 percent more expensive than in China. Additionally, there have been reports of lower yield rates and quality control issues that have required sending some production back to China. - The shift has led to a significant increase in exports to the United States. In the second quarter of 2025, smartphones assembled in India accounted for 44% of US smartphone imports, a substantial increase from the previous year. - Labor laws and work culture present another set of challenges. Unlike the common 12-hour shifts in Chinese factories, Indian labor laws have historically favored three eight-hour shifts, requiring a larger workforce. Though some states have moved to allow 12-hour shifts, implementation has faced resistance. - Tensions between India and China have complicated the supply chain transition. Indian authorities have reportedly been hesitant to approve investments from Chinese-based suppliers, and there have been difficulties in securing work visas for Chinese personnel needed to set up production lines. - By 2027, it is projected that one in four iPhones could be manufactured in India, with the country handling approximately 25-30% of global production. This highlights a long-term strategic shift for Apple to enhance supply chain resilience and reduce geopolitical risk.
