iManufacture: Apple's Love Affair With India is Paying Dividends

In April 2023, Apple opened its first official stores in India, marking a long-awaited moment for fans. The first, Apple BKC, welcomed customers in Mumbai on April 18, followed by Apple Saket in Delhi on April 20.

The excitement was unmatched as the crowd gathered early, some traveling from faraway cities just to be part of the launch. As the doors opened, eager visitors stepped inside, exploring the interiors and getting a first-hand feel of the Apple experience, now finally on their home turf. Apple CEO Tim Cook personally inaugurated both stores, interacting with customers and adding to the excitement.

Apple’s India Entry

Before its 2023 launch, Apple had faced several setbacks in opening stores in India due to FDI regulations requiring 30% local sourcing.

In 2016, it sought an exemption, arguing its products used cutting-edge technology, but approval was delayed. To comply, Apple expanded local manufacturing and launched the Apple Store Online in 2020. After gradually increasing domestic production, it finally met the criteria, paving the way for its first official stores in 2023.

On the other hand, Apple decided to diversify its manufacturing due to the COVID-19 pandemic and rising tensions with China. The pandemic disrupted global supply chains, highlighting the risks of over-reliance on a single country for manufacturing. Meanwhile, escalating trade tensions between the US and China, along with strict Chinese regulations, pushed Apple to diversify its production.

India emerged as a strong alternative, offering government incentives for local manufacturing and a growing consumer base. By expanding production and opening stores in India, Apple reduced its dependency on China while strengthening its foothold in a crucial emerging market.

Tim Cook described Apple's focus on manufacturing in India as a pragmatic move. Analysts had predicted that, given favorable conditions, India-made iPhones could account for 20% to 25% of Apple's global shipments by 2027.

Simultaneously in 2020, the Indian government introduced the smartphone PLI scheme. Some companies were selected to receive sops under the smartphone PLI scheme with an overall financial outlay of Rs 40,951 crore. Much of the success of this scheme in terms of investments, production, exports and job creation was driven by Apple’s contract manufacturers Foxconn, the Tatas (Wistron) and Pegatron.

Also Read: India Becomes Apple’s Hotspot, CEO Pins Hopes on Record Sales Surge

India Mobile Phone Export Growth

All of these factors together resulted in India’s mobile phone exports growing by nearly 50% in the first 10 months of the current fiscal year, reaching an estimated value of Rs 1.5 lakh crore between April and January, compared to Rs 1 lakh crore during the same period last year.

The India Cellular and Electronics Association (ICEA) also projected that mobile phone exports could surpass Rs 1.8 lakh crore by the end of this fiscal year, marking approximately 40% growth from Rs 1.29 lakh crore last year.

Mobile phone exports have become the biggest growth driver in India’s electronics sector, with the US emerging as a key market for Indian smartphones.

This growth has been driven largely by Apple, which has established a significant assembly base in India through its contract manufacturers. Additionally, the production-linked incentive (PLI) scheme has boosted exports while reducing imports, with domestic production now meeting almost 99% of India’s mobile phone demand.

Apple’s Role

iPhone exports from India were estimated at nearly Rs 1 lakh crore between April and January, a significant increase from Rs 60,000 crore during the same period last year. In January alone, around 70% of total mobile phone exports came from Apple’s iPhone shipments.

Apple’s expansion of its manufacturing base in India is driven by its strategy to reduce dependence on China amid geopolitical tensions. While a large portion of iPhone production remains in China, India has become an increasingly attractive location for assembly.

To accelerate this shift, Apple is working with key manufacturing partners like Foxconn, Pegatron, and Wistron, supported by the Indian government’s Production-Linked Incentive (PLI) scheme. Major component suppliers such as Luxshare and Jabil are also setting up operations, further strengthening India’s manufacturing ecosystem.

India is rapidly emerging as both a production and export hub for Apple. The company is investing in workforce training, supply chain development, and infrastructure while also expanding its retail presence, signaling a long-term commitment to the Indian market and reducing its reliance on China.

Also Read: Why Global Giants Like Tesla & Apple Are Flocking to Mumbai’s BKC

PLI Scheme

According to ICEA, mobile phone production in India has doubled since the launch of the PLI scheme, rising from Rs 2.2 lakh crore in FY24 to Rs 4.22 lakh crore in the current fiscal year. Production is expected to further increase to Rs 5.1 lakh crore in FY25.

The Production-Linked Incentive (PLI) scheme is an initiative by the Indian government to boost domestic manufacturing and attract global supply chains by offering financial incentives to companies that meet specific production targets. Launched in 2020, the scheme covers various sectors, including electronics, pharmaceuticals, and automobiles, aiming to reduce import dependence and increase exports.

The ICEA’s projection of Rs 1.8 lakh crore mobile phone exports by the end of this fiscal year is a staggering 680% increase since the scheme’s inception in FY20-21

In the electronics sector, including Apple’s suppliers, the PLI scheme provides cash incentives of 4-6% on incremental sales of locally manufactured goods over five years. This has encouraged global manufacturers like Foxconn, Pegatron, and Wistron to expand their production in India, aligning with the country’s broader goal of becoming a global manufacturing hub while reducing reliance on China.