Why Apple Is Sticking With India Despite Trump's Tariff Threats

News18

5 days ago

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India's not just a factory for Apple; it's a goldmine for sales. With 600 million smartphone users and counting, India is the world's second-largest market
Donald Trump is back in the White House, and he's got Apple in his sights. The US President, now in his second term, has been crystal clear: he wants iPhone production back in the US. He has even threatened a 25 per cent tariff on iPhones assembled in India, reportedly warning Apple CEO Tim Cook directly. You'd think that kind of pressure would have Apple scrambling to relocate factories stateside. But they're not. Instead, Apple is doubling down on India, pouring billions into manufacturing there. Why? It combines shrewd geopolitics, cold, hard economics, and a long-term wager that India's benefits outweigh Trump's tariff threats.
Compared to the United States, manufacturing iPhones in India is incredibly affordable. The International Labour Organisation estimates that a factory worker in India makes around $230 per month. In California, a similar worker earns around $2,900 a month. That's a twelve-fold difference. Even if Trump imposes a 25 per cent tariff on iPhones coming from India, the maths still favour staying put. The cost of labour, combined with other expenses like land and utilities, makes US manufacturing a tough sell.
The government of India is practically rolling out the red carpet for Apple. Through its Production-Linked Incentive (PLI) scheme, India offers cash incentives—up to 6 per cent of the value of goods produced—for companies that boost local manufacturing. For Apple, that means millions in savings annually. Since 2021, when the PLI programme kicked in, Apple's partners like Foxconn and Pegatron have ramped up production, churning out $14 billion worth of iPhones in India last year alone, according to India's Ministry of Commerce. That's a 100 per cent jump from 2022.
The government is also streamlining regulations and offering tax breaks, making it easier for Apple to expand factories in places like Tamil Nadu and Karnataka.
But it's not just about dollars and cents. Apple is playing a bigger game. For years, the company leaned heavily on China for manufacturing—over 90 per cent of iPhones were made there as recently as 2019. Then came the US-China trade wars, Covid supply chain chaos, and Beijing's tightening grip on foreign businesses. Apple realised it couldn't keep all its eggs in one basket. India, with its 1.4 billion people and growing middle class, was the obvious pivot. By 2025, Apple aims to produce 25 per cent of its iPhones in India, up from 14 per cent now, according to JPMorgan analysts. That's not just cost-cutting—it's risk management. If tensions flare with China, Apple has got a fallback.
Trump's tariff threats complicate things, but they don't change the calculus. Moving production to the US sounds patriotic, but it's a logistical nightmare. The US lacks the skilled workforce and supply chain infrastructure that India has built up. India has the ecosystem—component makers, assembly lines, and a government that's hungry for investment. Plus, Apple's not starting from scratch. Foxconn's Chennai plant, one of Apple's biggest, employs 40,000 workers and produces iPhone 16 Pro models—high-end stuff that used to be China-only.
There's also the market angle. India's not just a factory for Apple; it's a goldmine for sales. With 600 million smartphone users and counting, India is the world's second-largest market. Apple's iPhone sales there grew 50 per cent year-on-year in 2024, hitting $8 billion, according to Counterpoint. Local production keeps prices competitive by dodging import duties, which can add 20 per cent to a phone's cost. If Apple moved manufacturing back to the US, it would face higher production costs and lose ground in India's booming market. That's a double whammy no CEO would sign up for.
Geopolitics seals the deal. Trump's tariffs are a headache, but they're not unique. The US has slapped duties on Chinese goods for years, and India is less likely to end up in a trade war with Washington. Plus, India is cosy­ing up to the US as a counterweight to China, which gives Apple diplomatic cover. Apple is doubling down on India as a strategic manufacturing base, betting on its cost efficiency and geopolitical alignment with the US amid rising trade tensions. This isn't just about dodging tariffs on Chinese goods—India's skilled workforce, government incentives like the PLI scheme, and growing consumer market make it a pragmatic long-term play. Plus, aligning with a US-friendly partner helps Apple navigate an era of fractured global trade.
So, why is Apple sticking with India? It's cheaper, it's strategic, and it's a hedge against a volatile world. Trump can tweet and threaten all he wants, but Apple is playing chess while he's playing chequers. The numbers don't lie, and neither does the map. India is where the future is built—one iPhone at a time.
First Published:
May 28, 2025, 18:50 IST