If India stimulates a deeper manufacturing push, India may get from Apple’s exit: GTRI

Contrary to concerns about India’s losses, the Global Trade Institute (GTRI) stated in a report released on Friday that the withdrawal of the iPhone parliament could actually benefit the country. Currently, India earns less than $30 per iPhone, a large portion of which is effectively returned to Apple through incentives for production links.

“To protect Apple, New Delhi is cutting import tariffs on important smartphone components such as monitors, chipsets and batteries, a move that undermines companies that Indian companies are trying to build local supply chains,” said Gtri co-founder Ajay Srivastava.

Srivastava added that if Apple transfers rally elsewhere, India could be forced to surpass low-maintenance assembly and invest in deep manufacturing of core technologies such as semiconductors, displays and energy storage systems.

The report believes that India has the least role in the iPhone value chain at present and is heavily subsidized, and Apple’s strategic exit could lead to calls on policy makers to focus on building domestic capabilities in high-value components rather than relying on a shallow water assembly line powered by foreigners.

We’re worried

This shift will also address another long-standing U.S. complaint that will spark a trade deficit with India. While the actual value increase in India per iPhone is a fraction of the retail price of the device at $1,000, the total export value of $7 billion per year in trade statistics ($7 billion per year). According to a report by GTRI, deleting the iPhone parliament from India will help correct mismatch between the two countries and potentially alleviate trade tensions between the two countries.

The idea has attracted attention after U.S. President Donald Trump spoke at a business summit in Doha on May 15, publicly urging Apple CEO Tim Cook to stop iPhone expansion in India. He said: “I don’t want you to build in India…they can take care of themselves.”

However, Apple has not made any official statement on Trump’s remarks. The query sent to Apple has not been answered until the time of publication.

On Thursday, in response to Trump’s suggestion that Tim Cook stops expanding his business in India, a senior Commerce Department official said the company ultimately made a decision based on profitability and the strength of the local ecosystem.

“Global companies operate where they see better profit margins and long-term potential. India has proven to the world that it provides competitiveness and provides a strong environment for company development,” the official said, adding that India’s rise as a preferred destination for gatherings and output is driven by market access and policy stability.

iPhone cost breakdown

From a profitability perspective, the $1,000 iPhone is the result of a global distributed value chain, with Apple capturing about $450 through design, software and brand value. American component suppliers like Qualcomm and Broadcom donated another $80, while Taiwan’s chips are making $150. South Korea and Japan respectively add $90 and $85 with OLED screens, memory and camera systems. According to the GTRI report, Germany, Vietnam and Malaysia account for about $45 for smaller parts.

However, despite the eventual rally dominating, China and India each received only $30 per device, less than 3% of their retail price. Value-added at this stage may be low, but it enriches job creation.

Currently, the iPhone assembly line employs about 300,000 workers in China and 60,000 workers in India. GTRI reports that Trump wants to move this labor-intensive segment to the U.S. not because it is cutting-edge, but because it provides large-scale jobs.

However, this transformation will come at a cost. In India, remittance discs hover at a labor cost of $230 per month. In the U.S., the same job will cost more than $2,900 per month, an increase of 13 times under state minimum wage laws. The report said the cost of assembling each iPhone would rise from $30 to $390, cutting Apple’s per capita profit from $450 to about $60 unless offset by a price adjustment.

The trade think tank has made clear reasons for Apple to consider Trump’s demands. First, moving iPhone components to the United States will result in large-scale work, especially in the entry-level manufacturing role. Second, while Apple’s profit margins will shrink, a larger share of iPhone value will remain in the U.S. economy through wages, logistics and services.

Build opportunities

In contrast to GTRI, outstanding economist Biswajit Dhar has a different view of Apple Inc. To quote the proverb, a bird deserves two in a bush, Dhar said: “We have been dreaming of adding value and other things for twenty years. In the case of India, you can’t think that apples will improve the condition of the apple.

Dhar added that earlier, when the final product manufacturer was in India, it always depends on imported components. The automotive industry is a classic case. However, when the end product manufacturers have long-term commitments, they also encourage their component suppliers to move nearby. “Even China will focus more on internal restructuring. So in this case, it’s better to make a long-term commitment from Apple so we can at least hope to get something better in the years to come.”

Electronic products exports rose to US$23.57 billion in fiscal 23, up to US$2.911 billion and further increased to US$38.56 billion in fiscal 255, reflecting India’s growing role in global electronic manufacturing. The sharp rise shows that policy support under the PLI program, coupled with strategic partnerships with global companies such as Apple, is paying off. The electronics industry saw the highest export growth rate at 3246%, from $2.911 billion to $29.1 billion, and to $25 in $2.56 billion. The main export destinations are the UAE, the United States, the Netherlands, the United Kingdom and Italy.

Key Points

1. Despite hosting Apple’s rally business, India’s revenue is less than $30 per iPhone, most of which is offset by government subsidies and incentives.
2. If Apple assembles it elsewhere, India may turn its focus to deeper manufacturing, developing core technologies such as semiconductors, displays and batteries, rather than keeping the reliance on low-maintenance components.
3. India’s iPhone exports contribute more than $7 billion per year, but its actual value increases are very little.
4. U.S. President Trump publicly urged Apple CEO Tim Cook to stop expanding in India and move the iPhone parliament to the United States, but despite significantly higher labor costs, it still creates job benefits.
5. Although GTRI believes Apple’s exit is a wake-up call for India’s industrial policy, economist Biswajit Dhar believes that retaining Apple can encourage long-term investment and the development of local supply chains.