In reaction to rising trade tensions and significant tariffs imposed by the US government on Chinese goods, Apple Inc. is planning to expand its iPhone imports from India as the in-house production of phones in the US will increase the cost of production hence increasing the price itself. This action aims to reduce the financial effect of the tariffs while maintaining competitive pricing in the US market. The United States government's recent implementation of big tariffs on Chinese imports has had a huge impact on firms such as Apple, which has traditionally relied on China for a considerable amount of their production. In comparison, imports from India are subject to a 26 per cent duty, which are now put on hold for 90 days. This difference, though, has pushed Apple to reassess its supply chain dynamics and look at other production locations.
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India's Growing Role in iPhone Production
India has been progressively emerging as a significant player in Apple's manufacturing strategy. According to a Times Of India report, currently, approximately 10 to 15 per cent of iPhones are assembled in India, which is supposed to increase to 20 per cent in 2025. This growth is affected by India's decision to reduce import taxes on certain components that enhance the viability of local production.
Apple has expedited the shipment of iPhones from India and China to the US in anticipation of tariff implementation. The company dispatched five planeloads of products over three days in March to stockpile inventory ahead of the April 5 tariff enforcement date. The Washington Post has reported that the financial implications of these tariffs are substantial, with the 54 per cent tariff on Chinese imports potentially increasing iPhone 16 Pro costs by USD 300. Apple can mitigate these additional expenses by shifting production to India, where tariffs are lower.
US President Donald Trump and his economic advisors have advised that amid this tariff volatility, several manufacturing jobs will have to be redirected to the United States which will help increase employment opportunities in the US. However, An expert Dan Ives the Global Head of Technology research at a financial services firm told CNN that the idea is a "Fictional Tale" as it would in turn increase the price of the phones manufactured inside America casting three times the existing production cost due to the lack of production ecosystem.
He also added, “You build that (supply chain) in the US with a fab in West Virginia and New Jersey. They’ll be $3,500 iPhones." referring to fabrication plants.
Long-Term Strategy and Supply Chain Diversification
Apple is cautious about making large-scale supply chain changes due to the volatile tariff war and is seeking exemptions from the U.S. administration. The Indian government's recent policy adjustments have incentivized manufacturing within the country, reducing import duties on mobile phones and key components from 20 to 15 per cent, benefiting companies like Apple and facilitating more cost-effective production and assembly operations in India.
Potential Challenges and Considerations
Apple's decision to import more iPhones from India is a strategic move to diversify its manufacturing base and leverage favourable tariff differences. This move is part of a broader trend of companies that are reevaluating global supply chains in response to geopolitical shifts and economic policies for their own gain. India's growing production capacity may not match China's established infrastructure, and policy changes but it could influence the stability and predictability of manufacturing operations in both countries.