For years, India has dreamed of becoming the world’s manufacturing powerhouse and Apple’s new home base. But a sudden shift in the U.S.-China trade war could derail those ambitions.
India’s Strategy and the Impact of the Trade War
As previously noted, amid the U.S.-China trade tensions—which reached historic heights before cooling slightly—Prime Minister Narendra Modi’s government rolled out a shrewd strategy to lure tech giants and position India as Asia’s leading alternative.
The plan was straightforward: capitalize on Trump-era tariffs that drove up costs for U.S. companies in China and pitch India as a stable, cost-effective manufacturing hub.
Executives from Apple, Tesla, Meta, HP, and Dell scouted India for new production bases, seeking refuge from the Washington-Beijing standoff. However, the recent thaw in U.S.-China relations has cast doubt on this scenario.
A Blow to India’s Hopes: Tariffs and Competitiveness
The U.S. and China have slashed tariffs that once heavily penalized Chinese factories, dropping rates from 145% to 30%, while India’s 27% tariffs remain unchanged. This gap is making companies think twice about relocating to India.
Apple in India: Progress or Stagnation?
Until recently, all signs pointed to India emerging as the next global manufacturing hub. Apple, for instance, announced plans to shift much of its U.S.-bound iPhone production from China to India by 2026.
In fact, iPhone production in India surged 60% last year, now accounting for 15% of Apple’s global output. Foxconn and Tata have opened new plants, and the Indian government has pledged billions in semiconductor investments to strengthen local supply chains.
But what now? Officially, Apple insists its India commitments remain intact, despite Donald Trump’s public urging of Tim Cook to avoid making iPhones in India for the U.S. market.
Over the past 12 months, Apple has exported $22 billion worth of iPhones from India, with the goal of supplying most U.S.-sold iPhones from Indian factories by 2026.
Challenges Ahead
Yet India remains the backup option. While millions of phones are assembled there, most components still come from China. Analysts estimate that for every iPhone sold in the U.S., Apple keeps over 450inprofit∗∗,whileIndiaretainsjust∗∗450inprofit∗∗,whileIndiaretainsjust∗∗25—even though exports are labeled “Made in India.”
Moreover, doubts persist about India’s infrastructure readiness. Manufacturing efficiency, logistics, and bureaucratic hurdles lag behind China’s, and production costs run 5-10% higher.
Conclusion: A Dream with Hurdles
India’s path to becoming the world’s factory hinges on moving beyond assembly and building self-sufficient supply chains, streamlining logistics, and cutting red tape.
For now, China remains dominant, and even India relies on its components and raw materials. Until India achieves true supply chain independence, it will remain a secondary player—even as Apple seeks to diversify. The road to manufacturing leadership is still fraught with challenges.
By: Nestor Castillo, ForAllTechNews Director