United States 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."
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 LegalWiz.in, 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.
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."
