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Apple to shift 18 per cent of global iPhone production to India by FY25: Report

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Apple is expected to move at least 18 per cent of its global iPhone manufacturing to India by FY25, according to an analysis by Bank of America. These estimates are based on the targets committed by Apple’s contract manufacturers, Wistron, Foxconn and Pegatron, under India’s production-linked incentive scheme for mobile phones. 

General policy relaxations to help open branded outlets and stores in India, in addition to the manufacturing push, is expected to improve domestic demand for iPhones as well. At present India contributes to 3.6 per cent of Apple’s global iPhone sales, which can rise to over 5 per cent after CY25, according to the Bank of America report. 

Also read: Eye on target. Foxconn to start manufacturing iPhones in Karnataka by April 2024

“India’s targeted policies are capitalising on this opportunity: within just two years of the PLI scheme, iPhones’ exports from India scaled up to Rs 400 billion (~US$5bn) in FY23 vs Rs 110 billion in FY22 and would accelerate further as it has already reached a run-rate of $1 billion of exports per month since February 2023. Apple manufactures the latest models of iPhones in India, a sign of growing confidence in India’s potential to be one of the large manufacturing destinations, as it aims to diversify manufacturing outside China,” the report added. 

Apple and Samsung, which are the leading brands in the premium mobile segment, have been the biggest beneficiaries of the mobile PLI. At present, Apple and Samsung contribute 80 per cent of India’s mobile exports. 

Also read: Budgetary outlay. Apple may not apply for PLI scheme for IT hardware

The report also observed that the ramp-up in mobile phone manufacturing has not been followed by a proportionate rise in domestic value addition. “India’s DVA ratio within electronics exports at 18 per cent lags peers China (38 per cent) and Vietnam (24 per cent). According to our checks, the DVA ratio for mobile phones is 12-15 per cent for premium phones (priced at >Rs30k) and 18-20 per cent for mid-range phones,” the report said. 

“Despite the criticism, we believe India is rightly prioritising scale in the initial years versus an emphasis on domestic value add (DVA) ratio. Successful examples of China and Vietnam vindicate this strategy: DVA ratio for both countries fell sharply in initial years as they liberalised imports and targeted assembly operations to gain scale. As scale reached an inflection point, both scale and DVA ratio rose thereafter, implying a symbiotic relation,” the report concluded. 

Also read: ‘Exciting market’. Apple sees record growth in India during March quarter

In the medium term, it cannot be expected that India can localise its premium smartphone supply chain.



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