What’s behind India’s surging smartphone exports?

But that doesn’t mean India is a major smartphone manufacturing hub like China, yet. It is still importing a large chunk of the components that go into a smartphone.

Smartphone exports from India picked up speed in the latter part of 2020, and crossed $1 billion a month in late 2022. According to news reports, Apple assembled 14% of its iPhones, worth $14 billion, in India last year. The government attributes this to the production-linked incentive (PLI) scheme, which began in 2020 and which provides subsidies to firms that meet production targets.

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But much of the global manufacturing for electronics does not take place in any one country – it's split up across the world. It's therefore critical that Indian manufacturing be a part of such ‘global value chains’. A quantitative metric used in this context is global value chain-related trade, in which plants import raw materials, process them, and re-export them to their final markets. According to the World Bank, India’s total global value chain-related trade in manufacturing is about 50% of its total gross manufacturing trade. In electrical and optical equipment, the share is slightly lower, but it shows how entwined such trade is. In the context of smartphones, Indian manufacturers are still importing critical parts rather than making them here.

Value surge

India’s smartphone exports have also jumped in volume terms. In 2023-24 the country exported about 52 million smartphones, up from 49 million in 2022-23 and 44 million in 2019-20. But perhaps more importantly, the average value of each smartphone exported has increased sharply, from $85 per unit in 2019-20 to $296 per unit in 2023-24.

This is almost certainly due to the fact that Apple has become a major smartphone exporter from India. It manufactures various models, from iPhone 12 to iPhone 15 here, though not the high-end Pro and Pro-Max models, according to a report by Bloomberg. Ultimately, Apple reportedly intends to manufacture a quarter of its iPhones in India over the next couple of years. According to a Moneycontrol report, it's also looking to shift part of its iPad and AirPods manufacturing to India.

American primacy

In 2023-24, about a third of smartphone exports from India—about $5.5 billion, equivalent to around 13 million units—went to the US, according to government data. This was a dramatic increase from 2019-20, when mobile phone exports to the US were around $100 million. That year, India’s main export market for mobile phones was the United Arab Emirates (exports of $2 billion), followed by Russia ($496 million).

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The UAE remains India’s second-largest market, but Russia is no longer in the top 10, which now features a clutch of European markets. Interestingly, the average export value of a smartphone differs significantly depending on the country it is sent to. Among India’s top markets for smartphone exports, the average value in 2023-24 ranged from $192 for Austria to $419 for the US.

Importing exports?

In a 2023 paper, Rahul Chauhan, Rohit Lamba and Raghuram Rajan pointed out that along with smartphone exports, imports of smartphone components had shot up, showing that India was still just an assembly hub. In 2023-24, this pattern likely continued, with imports of circuits and other electronic components coming in at $33 billion, or more than double that of finished exports.

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These components are likely being used in other electronic devices as well, but the fact that the uptick in their imports coincided with the PLI scheme indicates that this import demand is being driven by PLI-linked manufacturers. That India is still largely an assembly hub for finished smartphones is not necessarily a bad thing. But it does show that India still has some way to go, and needs to target an increasing share of global value chains of components that go into electronic devices.

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