Apple's Plan to Shift 18% of Global iPhone Production to India by 2025: Bank of America Report

Apple's Strategic Move to Shift Global iPhone Production to India

According to a Bank of America research report, Apple, the world's most valuable company, is likely to transfer at least 18% of its global iPhone production to India by 2025. This strategic decision is driven by the Indian government's production-linked incentive (PLI) scheme for mobile phones, which offers incentives to encourage domestic production and boost the country's manufacturing sector.

Positive Impact of the Production-Linked Incentive Scheme

The PLI scheme for mobile phones plays a significant role in Apple's decision to shift iPhone production to India. The scheme provides favorable incentives that enable the American tech giant to expand its operations in the country. Amish Shah, Managing Director and Head of India Research at Bank of America, highlights that the PLI scheme's targets could drive Apple to relocate over 18% of its global iPhone production to India by FY25, with a projected 7% by FY23 and negligible production prior to the implementation of the scheme.

Potential Benefits for India's Domestic Production and Exports

The Bank of America report suggests that the PLI scheme for mobile phones can help India achieve its goal of reaching $126 billion in domestic production. Additionally, the scheme has the potential to contribute to a five-fold growth in mobile phone exports, reaching $55 billion by FY26. If Apple's vendors also expand their operations in India, the share of iPhone production within the country could further increase.

Apple's Growing Sales and Mobile Phone Demand in India

With the recent opening of two direct retail Apple stores in India, the report predicts that India could account for more than 5% of Apple's global iPhone sales by FY25. The country's mobile phone demand is experiencing a compounded annual growth rate of 15%. In terms of total electronic device demand in India, mobile phones make up 21.5%. The report highlights that India's mobile phone exports have doubled, leading to an expansion in overall exports from 16% to 25%.

Criticism and Future Potential of the PLI Scheme

While the PLI scheme has shown positive results in terms of production and export growth, some critics argue that the local value added remains relatively low at 18%, compared to China's 38% and Vietnam's 24%. However, the scheme continues to play a significant role in driving the expansion of mobile phone production and overall exports in India.

Conclusion

Apple's plan to shift a substantial portion of its global iPhone production to India by 2025 is fueled by the advantages provided by the government's production-linked incentive scheme.

This move aligns with India's objectives of boosting domestic production and increasing mobile phone exports. As India's mobile phone market continues to grow, the country presents a significant opportunity for Apple to strengthen its presence and contribute to its global sales.