Apple is contemplating a significant shift in its global iPhone production, with 18 percent of it potentially being moved to India by 2025. This move is primarily motivated by the Indian government’s production-linked incentive (PLI) scheme, designed to incentivize companies like Apple and its suppliers to expand their operations in the country. A report from Bank of America suggests that this scheme could assist India in tripling its domestic production to $126 billion and achieving a fivefold growth in exports, reaching $55 billion by FY26.
The Production Linked Incentive (PLI) in India is a government scheme that provides financial incentives to eligible companies based on their incremental production or sales. Aiming to boost domestic manufacturing, attract investments, create jobs, and enhance competitiveness in various sectors, this scheme encourages companies to increase production, adopt advanced technologies, and meet specific targets to qualify for the incentives. It is part of the government’s efforts to reduce import dependence, promote exports, and make India a global manufacturing hub.
Apple Ramps Up iPhone Production in India
Recent reports also indicate that Apple has already ramped up its iPhone production in India, going from 1 percent in 2021 to 7 percent in 2023. Furthermore, there have been speculations that Apple’s goal is to manufacture 25 percent of all iPhones sold globally in India by 2025.
Bank of America’s report highlights that mobile phones account for 21.5 percent of India’s domestic demand for electronics, which is growing at a compound annual growth rate (CAGR) of 15 percent. In FY2023, India consumed electronic goods worth $158 billion, representing an 11 percent CAGR growth over the period FY17-23. However, despite the significant demand, a large portion of the supplies is currently imported. In FY23, India’s electronics imports reached $77 billion, making it the second-largest import category and contributing to 20 percent of the country’s trade deficit.
The report points out that about 70 percent of the mobile phone’s cost, including components like the display, memory, and semiconductors, is difficult to localize. Achieving such localization would require substantial investment and access to advanced technology.
PLI Positions India as Reliable Global Supply Chain Option
The report also emphasizes the positive impact of the PLI scheme, which has helped enhance the export mix in local production. As a result, electronic exports have grown from 16 percent to 25 percent year-on-year, positioning India as a reliable global supply chain option for mobile phone and electronics manufacturers.
Apple has recently opened its first two exclusive retail stores in Mumbai and Delhi, with CEO Tim Cook personally inaugurating these outlets in April. As part of its expansion strategy, the company reportedly plans to open three additional stores in India by 2027.