Even with a proposed 25% tariff imposed by the United States on iPhones made in India, manufacturing these devices in the South Asian country remains cost-effective compared to domestic production in the U.S., according to a recent study by the Global Trade Research Initiative (GTRI).
The report follows a statement made by U.S. President Donald Trump, where he warned of a 25 per cent import tariff on iPhones if Apple chooses to manufacture the devices in India.
"If that is not the case, a tariff of at least 25% must be paid by Apple to the US," Trump said, raising concerns over Apple’s overseas production strategy.
Despite this threat, Global Trade Research Initiative (GTRI) asserts that the financial advantage of producing iPhones in India still outweighs the risks.
GTRI breaks down the cost components of a $1,000 iPhone (roughly ₹83,400), pointing to how over a dozen countries contribute to the device’s value:
Apple retains the largest share: $450 (₹37,530)
U.S. component makers like Qualcomm, Broadcom: $80 (₹6,672)
Taiwan (chip fabrication): $150 (₹12,510)
South Korea (OLED & memory chips): $90 (₹7,506)
Japan (camera modules): $85 (₹7,089)
Germany, Vietnam, Malaysia (smaller parts): $45 (₹3,753)
Notably, India and China, where most iPhones are assembled, earn only $30 (₹2,502) per unit—less than 3% of the total price.
A significant reason for India's cost-efficiency lies in its low labor costs:
Average monthly wage of Indian assembly workers: $230 (₹19,182)
U.S. assembly workers (e.g., in California): $2,900 (₹2,41,860)
This represents a 13-fold difference. According to GTRI, assembling an iPhone costs just $30 in India versus $390 in the U.S.
India’s Production-Linked Incentive (PLI) scheme further reduces Apple’s production burden.
If Apple shifts manufacturing to the U.S., the profit per iPhone could nosedive:
Current profit per iPhone: $450 (₹37,530)
Estimated profit if manufactured in U.S.: $60 (₹5,004)
This would force Apple to significantly hike iPhone prices to maintain margins.
The GTRI report clearly underscores the global nature of Apple’s supply chain and the continued cost benefits of manufacturing iPhones in India. Despite U.S. President Donald Trump’s warning of a 25% tariff on Indian-made iPhones, production in India remains financially viable due to drastically lower labor costs and governmental incentives like the Production-Linked Incentive (PLI) scheme.
The report also highlights that India and China—while key assembly locations—receive only a tiny portion of the total value, with Apple and its component suppliers across the globe capturing the bulk of it. Moving production to the U.S. would significantly increase Apple’s manufacturing costs, thereby shrinking profits unless retail prices are raised. In essence,
India continues to offer Apple a strategic manufacturing advantage, even under possible trade restrictions. With India contributing more prominently to Apple’s global supply chain, such insights may influence future geopolitical and economic discussions around global tech manufacturing.