Why Trump is eyeing India's Apple pie

India Today

27-05-2025

(NOTE: This article was originally published in the India Today issue dated June 2, 2025)"I don't want you building all over India.' Those are words that could crush a billion sleekly designed dreams. It's the Fable of the Forbidden Apple, repurposed for the 21st century. In starker words, US President Donald Trump doesn't want Apple Inc. to make its iPhones for the US market in India, which he calls 'a very high-tariff nation'. The silver lining: experts feel the world's most valued company has few other options if it has to pack its bags and shift out of its long-time base, China.advertisementThis fresh twist of the knife, in the ongoing global trade wars set off by the US, came on May 15 as Trump spoke in Qatar during his Arabian Gulf trip. 'I had a little problem with [Apple CEO] Tim Cook yesterday,' he started, loadinghis off-the-cuffism with a lot of freight, as usual. 'I said to him, 'Tim, you're my friend. You're coming here with $500 billion but now you're building all over India. I don't want you building in India'.' That $500 billion was an allusion to what Apple committed recently to invest in the US.
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The Trumpist formula relies on the US soaking back a lot of the manufacturing it had lost over the decades to overseas bases, especially China. His reciprocal tariffs, considerably softened since April 2, were a shock tactic meant to prod the prodigals to return. Apple is a prime exemplar. So any detour to India, while exiting China, sits ill with that plan. That came through in thetirade that followed. 'You can build in India if you want to take care of India,' Trump continued in his scattershot manner, 'because India is one of the highest tariff nations in the world. So, it's very hard to sell in India.' There was more sting left to come. Trump said India had offered a 'no tariffs' deal with the US for American goods, without giving details. All this is while New Delhi is striving breathlessly to clinch a favourable trade deal with the US during the 90-day breather in Trump's tariff calendar. India had originally copped 26 per cent tariffs.
APPLE'S GROWING INDIA DEPENDENCEApple is a leader in the premium smartphone segment (above Rs 45,000) in India, with a 58 per cent market share in 2024. Research firm IDC reckons it sold 3 million units of iPhones here in January-March 2025, its highest quarterly figures, up from 2.2 million in the same period last year. This was driven by low-cost EMIs, cashback offers and discounts by online retailers. The newly launched iPhone 16 series made up over half of all iPhone sales, say reports. Globally,Apple posted revenues of $391 billion in the fiscal ended Sep-tember 28, 2024. 'For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch and AirPods products sold in the US,' Cook told analysts in the Q2 2025 earnings call on May 1. An Apple spokesperson in India offered no comments on Trump's statements on India.
In India, Apple assembles iPhones via contract manufacturers like Foxconn, Pegatron (both units of Taiwanese firms) and Tata Electronics. Foxconn has two large facilities at Sriperumbudur, Tamil Nadu, and a new plant at Devanahalli near Bengaluru. Tata Electronics has acquired Taiwanese firm Wistron (at Kolar near Bengaluru), has a controlling stake in Pegatron's India operations (in Chennai), and has a plant at Hosur, Tamil Nadu. Now, Apple assembles the entire iPhone 16 lineup here, though most of the components are imported. In FY25, Apple assembled iPhones worth $22 billion (Rs 1.9 lakh crore) in India. The production has surged 60 per cent in the past one year, and it now assembles 20 per cent of its total iPhones in the country, says a Bloomberg report. Union Minister of IT and Electronics Ashwini Vaishnaw recently said Apple exported 'Made in India' iPhones worth Rs 1.5 lakh crore in FY25.DECOUPLING FROM CHINAChina presently accounts for 80 per cent of Apple's total production capacity across products. This long-settled fact was first shaken during Trump 1.0. As he launched his first round of tariffs on China, Apple—like other US firms—began to de-risk itself by shifting operations to Vietnam, Brazil and India. Decoupling from China in favour of India won't be easy. An iPhone contains around 1,000 components: most are made in China. 'It took almost a decade to build such a complex and high-quality supply chain,' says Prachir Singh, a senior analyst at Counterpoint Research. As per a 2023 Bloomberg Intelligence estimate, it would take about eight years for Apple to move out just 10 per cent of its production capacity from China. 'It has taken over five years in India for Apple to reach some form of capacity. (But) if not China, then India remains the only potential manufacturing destination for Apple, as the ecosystem is mushrooming, aided by lower-cost English-speaking skilled labour, world-class software talent, favourable government policies, and a huge domestic consumption market.'advertisementTrump's tirade may also be part-mock intimidation to gain leverage in trade talks, Singh feels, since it's known India needs 'halo' companies like Apple to foster a robust domestic supplier ecosystem. 'This statement won't affect Apple's plans, which are already in motion, with India in the driver's seat as an alternative to China.' Apple does not make iPhones in the US, and moving assembly units to that country would raise the cost of an iPhone by three times. Can Cook bite the Trump bullet?advertisementSubscribe to India Today MagazineMust Watch