During the times when global smartphone giants such as Apple and Samsung are looking to re-calibrate worldwide production to blunt the impact of Donald Trump’s higher tariffs on China and Vietnam, when shipping to the US India is sticking to the ‘Make in India’ mantra.
Demand May Increase For ‘Made In India’
Although it appears to be a logistical challenge as it requires major customs and other regulatory efforts.
Now, this issue is being addressed on an urgent basis as they have to ensure that supplies to the US remain competitive.
When it comes to Apple, it remains the world’s biggest electronics seller.
The iPhone maker has already started to use production at India’s factories to ship iPhones to the US.
They have further plans to drastically cut down exports from China.
This decision came at a time when Trump has announced a 26% reciprocal tariff on Indian exports to the US.
But the story is different for China as they have to pay the tariff at 54% (now 104%), including the 34% announced last week, and 46% for Vietnam.
According to a top industry official, “India’s factories will be increasingly used to ship only to the US. Demand in other markets such as Europe, Latin America and even Asia will now be catered to from the China factories. In a way, this will be a significant leapfrogging for iPhone production in India and may lead to major expansion in the country, if Apple decides to stick to the formula going forward.”
As we know that iPhones in India are being manufactured by units of Taiwanese Foxconn and Tata group.
Here, the latter had acquired the assets of Wistron and Pegatron – both from Taiwan – over the past few years.
How Did This Happen?
According to the officials, “If Apple does not go for developing all-new production zones in locations, such as the UAE and Saudi Arabia, or in Brazil – all of which have US tariffs of 10% – then there will be a significant expansion of capacity in India.”
This holds a great significance as any such move will see major investments by both Foxconn and Tatas.
We could see iPhone shipments to the US grow massively from the estimated $10 billion this fiscal.
Apple and Samsung appear to be shifting their production to India in order to counter the higher US tariffs on imports from China and Vietnam.
The whole purpose of this move is to retain the competitiveness in the US market as Apple increasingly uses Indian factories for iPhone shipments.
In the meantime, Samsung is also considering India as a temporary measure for its exports.
A lot will, however, depend on discussions between the US with other countries.
