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DW
19-05-2025
- Business
- DW
Can India replace China for Apple's iPhones? – DW – 05/19/2025
Apple has traditionally relied heavily on Chinese factories to make its products. The tech giant is now planning to significantly boost production in India. US tech giant Apple said this month that India would play a major role in making iPhones for the US market. "A majority of iPhones sold in the US will have India as their country of origin," CEO Tim Cook said earlier in May while announcing the company's latest quarterly results. He also noted that Vietnam would be producing nearly all iPads, Macs, Apple Watches and AirPods to be sold in the US. The decision was aimed at mitigating the impact of US President Donald Trump's tariff onslaught on the tech giant's supply chains as well as sales and profit margins. Apple shifting some more of its iPhone production to India presents not only a big opportunity but also some potential challenges, said Lekha Chakraborty, senior economist at the National Institute of Public Finance and Policy. "A nuanced analysis reveals potential challenges including cost competitiveness vis-a-vis China, labor market rigidities, and supply chain vulnerabilities," she told DW. Chakraborty underscored that making iPhones in India is 5-10% more expensive, pointing to costlier parts and relatively inefficient factories. "Furthermore, the fiscal implications of this investment warrant careful consideration, particularly in terms of tax revenues, infrastructure investments, and potential subsidies," said Chakraborty, adding that a "calibrated policy approach would be essential to mitigate risks and maximize gains." India: Reviving repair culture to fight e-waste To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Apple ramps up iPhone production in India An estimated 20% of iPhones are currently being made in India. According to Bloomberg, Apple produced $22 billion worth of iPhones in India in the 12 months through March 2025, marking a 60% jump from the prior year. The US company plans to produce over 60 million iPhones annually in the South Asian country by 2026, doubling current output and significantly strengthening India's electronics manufacturing sector. In India, iPhones are assembled by three primary contract manufacturers — Foxconn, Pegatron Corp and a Tata Group company that's formerly known as Wistron. Foxconn is the largest of the three, handling the majority of iPhone production in the South Asian nation. The Indian government also recently announced a new policy aimed at strengthening the nation's electronics manufacturing ecosystem. The production shift represents a significant change for Apple, which has traditionally relied heavily on Chinese factories to make its products. But Trump's hefty duties on imports to the US, especially the tit-for-tat tariff exchanges with China, put the company in a difficult spot and forced it to rethink its strategy. The US president has since granted a temporary reprieve for tech products, including smartphones and semiconductors. Washington and Beijing also agreed over the weekend to hit a 90-day pause on their tariff dispute. Scaling capacity and de-risking supply chain To transition into a truly independent manufacturing hub for Apple, India will need to invest heavily in infrastructure, skills and technology, Shrijay Sheth, founder of a consultancy firm, told DW. "While it is a robust win for India business-wise and boosts its standing as a preferred destination for companies seeking business-friendly destinations, it adds yet another layer of complexity to the already dicey Indo-China relations," he said. How Chinese overcapacity threatens emerging economies To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Sheth believes shifting a major chunk of production away from China to India will likely face impediments in terms of technology and expertise transfer. "It is naive to hope that the Chinese expertise plus skill transfer and production machinery would be transferred with the required speed given the current geopolitical scenario and especially when China loses a significant source of manufacturing jobs," he stressed. "How it will pan out on the ground is a big question when you factor the economics, skilled labor and how the supply chain will be rebuilt." 'Persistent limitations' Nikul Shah, co-founder and CEO of IndieSemic, which specializes in semiconductor and embedded systems, believes that India has the capacity to meet all iPhone demand in the future, but the ecosystem needs to be ramped up. He stressed that increased iPhone production offers India an opportunity to increase its role in global electronics manufacturing networks. "But success will depend on addressing persistent infrastructure and policy limitations that have historically constrained its manufacturing competitiveness," Shah underlined. "While it aligns with the 'Make in India' initiative, potentially transforming the country into a global electronics manufacturing hub, it also introduces risks such as over-reliance on a single multinational company and potential geopolitical pressures." Edited by: Srinivas Mazumdaru
Mint
25-04-2025
- Business
- Mint
India faces $14-billion export losses over US tariffs, NIPFP warns
New Delhi: India could incur direct export losses of about $14 billion, or 0.38% of GDP, owing to reciprocal tariffs imposed by US President Donald Trump, according to a presentation by the National Institute of Public Finance and Policy (NIPFP) on Friday. NIPFP, an autonomous research institute under the ministry of finance, raised concerns about import surges and dumping across various sectors, fuelled by the US-China decoupling. The presentation by NIPFP economists Rudrani Bhattacharya, Radhika Pandey and Manish Gupta highlighted that while Indian exports were likely to be affected by tariffs, a trade deal could mitigate some of the effects, though at the cost of sacrificing India's trade surplus with the US. The presentation, titled 'Impact of Trump Shock on Indian Economy - An Assessment' cautioned that imports could surge as products were diverted from China, Vietnam and other countries, while rising recession and inflation risks in the US could dampen global growth, affecting India's growth prospects. While goods exports face a direct hit, the services sector—key to India's overall export growth—could suffer due to stagflation in the US. Broad sectors such as electronics, gems and jewellery, machinery, textiles, metals, and transport equipment face heightened risk because of elevated tariffs, according to the presentation. Gems and jewellery are especially vulnerable as competing countries benefit from lower tariffs, potentially eroding India's market share, it noted. NIPFP said labour-intensive industries such as footwear, garments, rubber articles, furniture and toys had the potential to capitalise on opportunities from countries with higher tariffs than India. "For example, for footwear, the major exporters to the US are China and Vietnam, but they are subject to higher tariffs. India could gain some market share but needs to scale up its manufacturing," it added. India's goods trade surplus with the US was $41.18 billion in FY25, 16.6% higher than the previous year's $35.32 billion. This growth was due to an 11.6% rise in exports to the US to $86.51 billion, while imports from the US grew 7.4% to $45.33 billion. Economists at NIPFP anticipate that the US-China decoupling could lead to dumping of key commodities such as resins, paper and rubber into India. "On account of Chinese retaliatory tariffs on the US, the dumping of agricultural products into India cannot be ruled out," they added in the presentation. The economists suggested strategies to address trade imbalances and enhance India's global trade position, such as reducing the trade surplus with the US by boosting imports of oil and other products, accelerating trade negotiations, securing sector-specific exemptions, and diversifying exports to the EU, UK, and ASEAN. They also recommend strengthening domestic manufacturing through initiatives such as Make in India, focusing on semiconductors, renewable energy and electronics, while offering targeted concessions on select US goods, expanding production-linked incentive schemes for vulnerable sectors, and improving export infrastructure and logistics. According to the presentation, India may either be able to grab trade diversification opportunities thrown up by differential tariffs, or the impact of US trade policies on global growth, including India, could be closer to the global financial crisis of 2008-09. New Delhi: India could incur direct export losses of about $14 billion, or 0.38% of GDP, due to reciprocal tariffs imposed by US President Donald Trump, raising concerns about import surges and dumping across various sectors, fueled by the US-China decoupling, according to a presentation by the National Institute of Public Finance and Policy (NIPFP) on Friday. The presentation by NIPFP economists Rudrani Bhattacharya, Radhika Pandey, and Manish Gupta highlighted that while Indian exports are likely to be impacted by tariffs, a trade deal could mitigate some of the effects, though coming at the cost of sacrificing India's trade surplus with the US. The presentation titled 'Impact of Trump Shock on Indian Economy - An Assessment' cautioned that imports could surge as products are diverted from China, Vietnam, and other countries, while rising recession and inflation risks in the US could dampen global growth, affecting India's growth prospects. Additionally, while goods exports face a direct hit, the services sector—key to India's overall export growth—could suffer due to US stagflation. Broad sectors such as electronics, gems and jewellery, machinery, textiles, metals, and transport equipment face heightened risk due to elevated tariffs, according to the presentation. Gems and jewellery, in particular, are vulnerable, as competing countries benefit from lower tariffs, potentially eroding India's market share, it noted. The presentation highlighted the potential for labour-intensive industries like footwear, garments, rubber articles, furniture, and toys to capitalize on opportunities from countries with higher tariffs than India. "For example, for footwear, the major exporters to the US are China and Vietnam but they are subject to higher tariffs. India could gain some market share but needs to scale up its manufacturing," it added. India's goods trade surplus with the United States for FY25 reached $41.18 billion, a 16.6% increase from the previous year's $35.32 billion. This growth was driven by an 11.6% rise in exports to the US, totaling $86.51 billion, while imports from the US grew 7.4% to $45.33 billion. Economists at NIPFP anticipate that, due to the US-China decoupling, key commodities such as resins, paper, and rubber could face dumping into India. "On account of Chinese retaliatory tariffs on the US, the dumping of agricultural products into India cannot be ruled out," they added in the presentation. The NIPFP economists suggested strategies to address trade imbalances and enhance India's global trade position, including reducing the trade surplus with the US by boosting imports of oil and other products, accelerating trade negotiations, securing sector-specific exemptions, and diversifying exports to the EU, UK, and ASEAN. They also recommend strengthening domestic manufacturing through initiatives like "Make in India," focusing on semiconductors, renewable energy, and electronics, while offering targeted concessions on select US goods, expanding PLI schemes for vulnerable sectors, and improving export infrastructure and logistics. According to the presentation, India could either be able to grab trade diversification opportunities due to differential tariff advantages, in the aftermath of the reciprocal tariffs, or the impact of disruptions due to US policies on global growth, including India, could be closer to the global financial crisis (2008-09). First Published: 25 Apr 2025, 06:32 PM IST
