India may gain from Apple’s Inc exit if it spurs deeper manufacturing push: GTRI
Summary
The report argues that India's current role in the iPhone value chain is minimal and heavily subsidised, and Apple's strategic exit could serve as a wake-up call for policymakers.
NEW DELHI :
While Indian officials from the commerce ministry are banking on the competitive ecosystem and strong policy support to convince Apple Inc. to stay and expand its manufacturing base in India, trade experts argue that the tech giant should seriously consider bringing iPhone assembly back to the US. They believe this move would not only create large-scale employment in America but could also trigger long-term gains for India by pushing it toward more meaningful industrial development.
Contrary to concerns that India would lose out, the Global Trade Research Institute (GTRI), a trade think tank, in its report released on Friday, suggested the exit of iPhone assembly might actually benefit the country. At present, India earns less than $30 per iPhone, a large portion of which is effectively returned to Apple through production-linked incentives.
“In order to protect Apple, New Delhi is slashing import duties on crucial smartphone components—like displays, chipsets, and batteries, a move that undermines Indian companies trying to build a local supply chain," said Ajay Srivastava, GTRI co-founder.
Also Read: Donald Trump tells Apple CEO Tim Cook to stay out of India, ‘We’re not interested… India can take care of itself’
Srivastava added that if Apple shifts assembly elsewhere, India could be compelled to move beyond low-margin assembly and invest in deep manufacturing of core technologies such as semiconductors, displays, and energy storage systems.
The report argues that India's current role in the iPhone value chain is minimal and heavily subsidised, and Apple's strategic exit could serve as a wake-up call for policymakers to focus on building domestic capabilities in high-value components rather than relying on shallow assembly lines driven by foreign players.
US worries
The shift would also address another longstanding US grievance—its ballooning trade deficit with India. While India’s real value addition per iPhone is a tiny fraction of the device’s $1,000 retail price, the entire export value—over $7 billion annually—is counted against the US in trade statistics. Removing iPhone assembly from India would help correct this mismatch, potentially easing trade tensions between the two countries, according to the GTRI report.
The idea gained traction after US President Donald Trump, speaking at a business summit in Doha on 15 May, publicly urged Apple CEO Tim Cook to halt iPhone expansion in India. “I don’t want you building in India...They can take care of themselves," he said, pressing Cook to bring the final assembly of iPhones home.
However, Apple Inc. has not made any official statement in response to Trump’s remarks. A query sent to Apple remained unanswered until press time.
On Thursday, in response to Trump's advice to Tim Cook to stop expanding operations in India, a senior commerce ministry official said companies ultimately decide based on profitability and the strength of the local ecosystem.
Also Read: No change to Apple's India iPhone plan for now amid Trump's strictures
“Global companies operate where they see better margins and long-term potential. India has already demonstrated to the world that it offers competitive capabilities and a robust environment for companies to grow," the official had said, adding that India’s rise as a preferred destination for assembly and production is driven by both market access and policy stability.
iPhone cost break-up
As things stand in terms of profitability, a $1,000 iPhone is the result of a globally distributed value chain, with Apple capturing around $450 through design, software, and brand value. US component suppliers like Qualcomm and Broadcom contribute another $80, while Taiwan earns $150 for chip fabrication. South Korea and Japan add $90 and $85, respectively, through OLED screens, memory, and camera systems. Germany, Vietnam, and Malaysia account for about $45 through smaller parts, as per the GTRI report.
Yet, despite dominating final assembly, China and India each receive just $30 per device—less than 3% of its retail price. This stage may be low in value addition, but it’s rich in job creation.
Currently, some 300,000 workers in China and 60,000 in India are employed on iPhone assembly lines. The GTRI report said that Trump wants to relocate this labour-intensive segment to the US—not because it’s cutting-edge but because it offers large-scale employment.
However, the shift would come with a price. In India, labour costs for assembly hover around $230 per month. In the U.S., the same work would cost upwards of $2,900 per month under state minimum wage laws—a 13-fold increase. Consequently, the cost of assembling each iPhone would rise from $30 to about $390, slashing Apple’s per-device profit from $450 to about $60 unless offset through pricing adjustments, the report said.
Also Read: Deepak Shenoy agrees with Donald Trump's take on making Apple iPhones in US. Here's why
The trade think tank presented clear reasons for Apple to consider Trump’s request. First, relocating iPhone assembly to the US would generate large-scale employment, particularly in entry-level manufacturing roles. Second, while Apple’s profit margins would shrink, a larger share of the iPhone’s value would stay within the American economy through wages, logistics, and services.
Build on opportunities
In contrast to GTRI, distinguished economist Biswajit Dhar has a different view on Apple Inc. Citing the proverb, a bird in the hand is worth two in the bush, Dhar said, “We have been dreaming about value addition and other things for over two decades. You cannot think that Apple moving out of India will improve the situation; it will make things worse. If Apple is here to stay, then there is also a possibility of advancement going forward."
Dhar added that earlier, when final product manufacturers were based in India, it was always dependent on imported components. The auto industry is a classic case. But when there is a long-term commitment by a final product manufacturer, they also encourage their component suppliers to relocate nearby. “Even China is focusing more on internal restructuring. So, in this situation, it is better to have a long-term commitment from Apple Inc., so that we can at least hope for something better in the years to come," he added.
Also Read: How Apple became dependent on China for large chunk of manufacturing and sales, (and success)
Exports of electronic goods stood at $23.57 billion in FY23, rose to $29.11 billion in FY24, and further increased to $38.56 billion in FY25, reflecting India’s growing role in global electronics manufacturing. The sharp rise suggests that policy support under the PLI scheme, coupled with strategic partnerships with global firms like Apple, is paying off. The electronics goods sector saw the highest export growth rate at 32.46%, rising from $29.11 billion in FY24 to $38.56 billion in FY25. The major export destinations are the UAE, US, Netherlands, UK, and Italy.
Key takeaways
- Despite hosting Apple’s assembly operations, India earns less than $30 per iPhone, much of which is offset by government subsidies and incentives.
- If Apple moves its assembly elsewhere, India might shift its focus towards deeper manufacturing, developing core technologies such as semiconductors, displays, and batteries, instead of remaining dependent on low-margin assembly.
- India’s iPhone exports contribute over $7 billion annually, but its real value addition is minimal.
- US President Trump publicly urged Apple CEO Tim Cook to stop expanding in India and relocate iPhone assembly to the US, citing job creation benefits despite significantly higher labour costs.
- While GTRI sees Apple’s exit as a wake-up call for India’s industrial policy, economist Biswajit Dhar argues that retaining Apple could encourage long-term investment and development of local supply chains.
