Apple is strategically expanding its manufacturing footprint in India to reduce dependence on China, driven by geopolitical tensions and supply chain vulnerabilities. This initiative began in 2017 when Karnataka’s IT minister, Priyank Kharge, engaged Apple to establish iPhone production in the state. Today, Apple’s suppliers, including Foxconn and Tata Electronics, are producing iPhones in Karnataka and Tamil Nadu, with Foxconn manufacturing the latest iPhone 16 Pro models. Currently, about 15% of Apple’s iPhones are made in India, a figure projected to rise to 25% by 2027. This shift has elevated mobile phones to surpass diamonds as India’s leading product export.
However, Apple’s transition faces challenges. The company must navigate complex geopolitical dynamics to avoid straining its relationship with China, which remains a significant production base. Additionally, replicating China’s extensive supply chain and skilled labor force in India is a formidable task. While Tata aims to become Apple’s first comprehensive supplier in India, it is relatively new to electronics manufacturing. Moreover, India’s stringent regulations on Chinese investments and visa restrictions for Chinese technicians have impeded the swift relocation of Apple’s supply chain. Despite these hurdles, Apple’s deepening engagement in India signals a significant shift in global manufacturing trends, reflecting the company’s efforts to diversify its production amid evolving geopolitical landscapes.
India managed to attract Apple through a combination of strategic government initiatives, geopolitical timing, and competitive incentives:
- Government Initiatives and Incentives: India’s central and state governments actively courted Apple by offering tax breaks, financial incentives, and a conducive business environment. The Production-Linked Incentive (PLI) scheme, which earmarked nearly $6 billion to promote smartphone manufacturing, played a pivotal role. Karnataka’s IT minister, Priyank Kharge, made early moves in 2017 to pitch Karnataka as a manufacturing hub by emphasizing the state’s talent pool and offering Apple favorable terms.
- Geopolitical Shifts: The U.S.-China trade tensions, particularly during Donald Trump’s presidency, created an urgency for Apple to diversify its supply chain. The threat of tariffs on Chinese goods and the broader “China Plus One” strategy motivated Apple to explore alternatives like India.
- Strategic Messaging: Apple’s operations in India were often handled with discretion due to the sensitive geopolitical relationship between India and China. Indian officials referred to Apple as “the fruit company” even in private discussions to avoid drawing attention, highlighting the careful diplomacy involved.
- Local Partnerships: By collaborating with established Indian businesses like Tata Electronics, Apple ensured it had local partners that could support its ambitious manufacturing goals. Tata positioned itself as Apple’s first full-service supplier in India, acquiring existing facilities and investing in new ones.
- Proactive State-Level Engagement: States like Tamil Nadu and Karnataka made frequent trips to Taiwan to attract Apple’s suppliers, such as Foxconn and Wistron. This aggressive courting strategy resulted in the establishment of key manufacturing plants in India.
- Workforce Development: While India still faces challenges in replicating China’s flexible workforce, Tamil Nadu, in particular, positioned itself as a favorable place for employing women in manufacturing, creating safe and supportive work environments.
- Economic and Market Potential: India’s growing smartphone market and its potential as a production base for both domestic and export markets appealed to Apple’s long-term business strategy.
According to the Financial Times, this combination of incentives, geopolitical dynamics, and strategic state and business partnerships helped India secure Apple’s growing manufacturing footprint.