India’s role in Apple’s success: The story behind Rs 1 trn iPhone exports

Apple has surpassed the Rs 1 trillion-mark for iPhone exports from India in 2024, achieving record outbound shipments of $12.8 billion (Rs 1.08 trillion), thereby reflecting a 42 per cent year-on-year increase, reports The Economic Times.

This growth is attributed to enhanced local value addition, which now ranges from 15-20 per cent depending on the model, and a nearly 46 per cent rise in domestic production to $17.5 billion (Rs 1.48 trillion) compared to the previous year, as per initial estimates for January to December, the news report said.

In 2023, Apple exported $9 billion worth of iPhones, representing three-fourths of its domestic manufacturing output of $12 billion.

A government official described Apple’s export achievement as “unprecedented for a single product in a year”, emphasising the impact of the smartphone production-linked incentive (PLI) scheme. The production and export figures are based on the freight on board (FOB) value, which excludes retail markups of about 60 per cent. Incentives under the PLI scheme are calculated on the FOB value, the report said.

On track for $30 billion in local manufacturing

Apple has steadily increased its local value addition to 20 per cent for some models by expanding its supplier network in India, industry sources noted. At the PLI scheme’s inception, this value addition stood at just 5-8 per cent. If this momentum continues, Apple could achieve $30 billion in annual production within a few years, raising India’s share in its global iPhone production ecosystem to over 26 per cent, up from the current 14 per cent, the news report said.

Apple is also expanding its retail presence in India, the world’s second-largest smartphone market, which is shifting towards premium devices. Currently, India ranks as Apple’s fifth-largest market, following Japan and the UK in third and fourth positions, respectively.

Local iPhone sales volumes are expected to grow by 20 per cent this year, reaching up to 15 million units, as Apple focuses on emerging markets to counter a decline in its market share in China, influenced by Huawei’s resurgence.

Strengthening local partnerships

Preliminary data shows that of the $12.8 billion in exports, Foxconn (Hon Hai) accounted for 54 per cent, Tata Electronics for 29 per cent, and Pegatron for 17 per cent. Pegatron was recently acquired by Tata. All PLI scheme beneficiaries are required to report production, export, and employment data to the government.

Since the PLI scheme began in 2021, Apple’s ecosystem has consistently exceeded projections for production, exports, and job creation. The company has emerged as India’s largest and fastest-growing private-sector employer, generating around 185,000 direct jobs, over 70 per cent of which are held by women, many of them first-time workers, the news report said.

Foxconn’s iPhone plant in Tamil Nadu is India’s largest factory by employment across all sectors, with over 30,000 women among its 42,000 workers during peak operations.
Focus on local value addition

Apple is prioritising value addition in India by onboarding Indian and predominantly non-Chinese suppliers. The company has started producing components and sub-assemblies locally. Many of its vendors are expected to participate in the forthcoming electronics components incentive scheme, according to government and industry sources as cited by the report.

While the PLI scheme has rapidly scaled up the final assembly of electronics, local production of components like printed circuit boards (PCBs), camera modules, display sub-assemblies, lithium-ion cells, speakers, vibrator motors, and other mechanics has lagged. These components, which account for around 50 per cent of the cost of a mobile phone or laptop, are expected to be included in the upcoming incentive scheme.