Editorial: China’s loss, India’s gain

Apple launching two stores in India shows New Delhi’s growing prowess in manufacturing

Apple launching two stores in India — the biggest retail push by the tech giant — and scaling up domestic manufacturing of iPhones is yet another sign that China’s exit will be India’s gain. New Delhi’s growing prowess in manufacturing and the rising purchasing power of Indian consumers are helping in tilting the scales. The back-to-back launch of retail stores in Mumbai and New Delhi underlines how the world’s most valuable company is bullish on the Indian market. After years of having offered its products through a large reseller network, the company’s retail push in India comes on the back of not just strong financials but also a changing geopolitical scenario which has forced Apple to forge meaningful global alliances outside of China. Here, India presents a tremendous opportunity. In the past few years, Apple has ramped up the production of iPhones in India. The Cupertino-based tech major now manufactures almost 7% of its total iPhone production in India, compared with just 1% in 2021. No doubt, India has become the world’s fastest-growing smartphone market. Apple manufactures iPhone 11, iPhone 12, iPhone 13 and iPhone 14 in India. In addition to this, it was recently revealed that it will also manufacture AirPods in the country. The growing conflict between the US and China, which began with a trade war but has since expanded to encompass sweeping bans on the exchange of chips and capital, is spurring a rethink of the electronics industry’s decades-old supply chain.

The world’s reliance on China became starkly clear during the pandemic when Beijing’s restrictions choked off the supply of everything from phones to cars. Last year, Apple struggled to run operations smoothly in China’s ‘iPhone City’ complex in Zhengzhou. The company was even forced to cut outputs in the country. Apple’s supply chain data shows China’s prominence in the company’s global manufacturing is declining. In the five years up to 2019, China was the primary location of 44% to 47% of its suppliers’ production sites but that fell to 41% in 2020 and 36% in 2021. Apple supplier Foxconn is stepping up its expansion in India, with a plan to quadruple the workforce at its iPhone factory over two years. The Centre recently announced a few incentives to boost local manufacturing in the country that could benefit companies like Apple. There are several reasons why Apple is pushing for expansion in India, prime among which is the rise in the company’s fortunes in the country over the last few years. Apple had a 60% market share in the premium smartphone market in India in 2022, quite ahead of Samsung’s’ 21% share. Also, iPhone exports from India crossed the $5-billion-mark in 2022-23. It has also seen a record number of people switching from Android and other operating systems to iOS in India.

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