Apple announced plans to shift much of its iPhone production for the US from China to India. But a new trade deal between the US and China could hurt those plans.
Recently, the US dropped tariffs on Chinese goods from 145% to 30%, while India’s tariffs remain around 27%. This could lead companies to move back to China or slow down investments in India, says Ajay Srivastava of the Global Trade Research Institute.
India had started to benefit from global companies moving production away from China. New export orders reached a 14-year high, and sectors like electronics, textiles, and toys saw growth. Economists believed India was well placed to fill the gap left by China.
However, the US-China trade reset changes the picture. Even though India is in talks with the US for its own trade deal and recently signed one with the UK, other countries like Vietnam and Thailand still compete strongly. Experts say India needs big improvements in ease of doing business and infrastructure to truly benefit.
India’s manufacturing share in GDP has stayed around 15% for 20 years, despite efforts like the Production Linked Incentive (PLI) scheme. Also, India still depends on China for many components, including for iPhones. Right now, India earns only about $25 per iPhone made locally, while Apple makes over $450 on each US sale.
Unless more components are made in India and supply chains are built locally, the real benefits will be limited. Jobs in assembly plants are low-quality, and some investments are smaller than the subsidies the government gives.
There’s also concern that Chinese firms might use India to bypass US tariffs. India seems open to allowing more Chinese factories, but this might hurt its own industry growth in the long term.
Experts say that if India wants to truly become a global factory, it must lower production costs, improve logistics, and create stable rules. Big announcements aren’t enough—India needs long-term reforms to compete globally.