Made in India still makes sense for Apple, despite U.S. tariff talk

New Delhi, May 24:  Even if the United States were to impose a 25% tariff on iPhones assembled in India, the overall cost of manufacturing would still be significantly lower compared to producing them in the U.S., according to a new report by the Global Trade Research Initiative (GTRI).

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This analysis follows a recent statement by former U.S. President Donald Trump, who warned of imposing a 25% tariff on iPhones if Apple moves production to India. However, the GTRI report emphasizes that even with such a tariff, India remains a far more cost-effective manufacturing base.

The report breaks down the value chain of a $1,000 iPhone, which involves contributions from multiple countries. Apple itself captures the largest portion—about $450 per device—through its branding, design, and software. U.S.-based component suppliers like Qualcomm and Broadcom contribute around $80, while Taiwan adds $150 through chip production. South Korea supplies OLED displays and memory chips worth $90, and Japan provides camera components worth $85. Additional parts from Germany, Vietnam, and Malaysia contribute around $45.

Assembly, primarily done in China and India, accounts for only $30 per unit—less than 3% of the total retail price. Despite playing a central role in iPhone assembly, both countries see limited economic gains per device.

The GTRI report argues that manufacturing in India remains financially advantageous even with a 25% tariff, largely due to the stark difference in labor costs. In India, an assembly worker earns about $230 per month. In contrast, a worker in U.S. states like California could cost Apple around $2,900 per month—a 13-fold increase—due to minimum wage laws and other labor-related expenses.

As a result, the cost of assembling an iPhone in India is approximately $30, compared to an estimated $390 in the U.S. Furthermore, Apple benefits from India’s Production-Linked Incentive (PLI) scheme, which provides additional financial support for domestic manufacturing.

If Apple were to shift iPhone production entirely to the United States, the company's profit margin per device could plummet from $450 to just $60, unless retail prices are substantially raised.

In conclusion, the GTRI report underscores the importance of global value chains and labor cost advantages in keeping India a competitive option for Apple’s manufacturing, even in the face of potential trade restrictions from the U.S.

(With agency inputs)