Modi launched the “Make in India” initiative more than 10 years ago when he first became Prime Minister. The objective was to boost manufacturing in India and create many more manufacturing jobs. Many have criticized this move, saying that it wasn’t as effective as intended and that the percent of manufacturing in India actually declined over the past decade, however, Apple’s move to shift iPhone manufacturing to India may be a sign that the initiative is beginning to bear fruit. Incidentally, Apple’s move is part of Big Business’s China+1 strategy to consider alternatives to China for manufacturing.
Why is Apple Moving Manufacturing to India?
Trump’s newly imposed tariffs are part of what motivate Apple to move manufacturing to India going forward. Currently, 80 percent of its iPhones are made in China, however, these phones are set to become too expensive for most American consumers now that the tariffs are in effect. Apple currently sources phone parts from two major companies in India: Foxconn and Tata, according to Reuters.
According to Al Jazeera, the tech major is in the process of ramping up iPhone production in the world’s largest democracy. That was a move to try to “beat Trump’s tariffs.” Apple even went so far as to airlift 600 tons of phones from India to America before the tariffs went into effect. Narendra Modi may have implemented legislation that encouraged this move.
India’s government scrapped import taxes for certain iPhone parts. Rising labor costs in China are also part of Apple’s decision to shift manufacturing bases. However, the cost of producing iPhones in India could be up to 8% more expensive for Apple than manufacturing in China was.
China is Throwing Up Challenges
The Chinese government may be loathe to give up its dominant global manufacturing position unwillingly. It has attempted to thwart Apple’s efforts by making it harder for Apple’s supplier to ferry parts from China to India. Shipments have been unexpectedly delayed or even blocked.
Apple Be Just the Beginning
Yes, Apple’s move may signal the beginning of a seismic shift in manufacturing from China to India. While Apple itself even admitted that moving all manufacturing processes and plants from China to India would take several years, it’s a huge and good beginning. And given that India’s government has taken steps to encourage manufacturing through favorable legislation in recent years, it is a promising start!
