According to experts, the Apple iPhone became the first brand to cross the $5-billion export mark from India, underlining the speed at which the company has scaled up its manufacturing operations here in the last couple of years.
Backed by Apple, India’s overall smartphone exports also crossed $10 billion for the first time in a financial year, with Samsung accounting for around $3.5-4 billion in FY23, according to trade and industry data. India is now exporting smartphones to even developed markets, including the UK, Italy, France, Middle East, Japan, Germany and Russia, said industry executives. ET’s queries sent to Apple and Samsung regarding exports data remained unanswered at the time of going to press.
Apple has been doubling down on India as a manufacturing hub, not just for exports but even for the domestic market which is seeing a rise in demand for premium devices.
India now accounts for 5% of total iPhone production, up from less than 1% in 2020. China remains the largest maker of iPhones with India at the second spot.
The Cupertino-based company is scheduled to open its first two company-owned retail stores in India on April 18 and April 20 in Mumbai and Delhi, respectively. The company opened its online store in 2020.
As reported by ET in its April 7 edition, Apple chief executive Tim Cook is likely to fly down for the store launches, underscoring India’s importance for the future plans of the US giant. Apple is working to diversify its manufacturing base out of China amidst continuing geopolitical tensions.Cook is expected to meet top policymakers including Prime Minister Narendra Modi and apprise them about the company’s focus on iPhone manufacturing in India. Apart from iPhones, Apple is also exploring the possibility to start production of AirPods in the country, officials told ET.
The company’s three Taiwanese contract manufacturers — Foxconn (Hon Hai), Wistron and Pegatron — currently make and export iPhone 12, 13, and 14 models from their plants in Tamil Nadu and Karnataka.
Through the three manufacturers, iPhone exports from India surged to roughly Rs 40,000 crore in FY23 from Rs 11,000 crore in FY 21-22, according to estimates. March 2023 saw the largest-ever monthly exports of iPhones from India, comfortably over the $1-billion mark. The company had touched the $1 billion exports mark in December 2022.
“It makes sense that Apple is considering India as the next major manufacturing destination in addition to China. Apple has been and will continue to expand its manufacturing base in India. Exports will only increase in the coming years,” said Navkendar Singh, associate vice president, Client Devices & IPDS, IDC.
The iPhone-maker has been the majority contributor in the rising mobile phone exports from India — from $5.8 billion in FY22 to over $10 billion in FY23 — followed by Samsung, whose pace of export growth has been slower, said officials and industry executives. Samsung’s exports were around $3 billion in FY22.
The three Apple contract manufacturers along with Samsung are cleared to receive sops under the production-linked incentive (PLI) scheme for smartphone manufacturing. Participants are required to submit data regarding production, exports and job parameters to the government on a regular basis.
“Going past $10 billion exports exhibits not just the success of the PLI scheme but demonstrates tremendous government-industry trust and collaboration. Going forward, competitiveness through lower input tariffs, flexible labour laws and trade facilitation is key to our future growth,” Pankaj Mohindroo, chairman, India Cellular and Electronics Association (ICEA), told ET.
Mobile phones have become the single-largest contributor to electronics exports from India, backed by the PLI scheme aimed at weaning away electronics manufacturers mainly from China and Vietnam. According to a report by JP Morgan, Apple plans to shift 25% of its iPhone production to India by 2025. Government officials expect this number to be at least 20% in the next 3-4 years
The South Asian nation has consistently been one of the best-performing markets for Apple for more than six years. In the quarter to December 2022, the company achieved record overall sales in the country.
Cook told analysts in February that India is a “hugely exciting market” and a “major focus”. “We brought the online store there in 2020. We will soon bring Apple retail there,” he said.
Apple has also been growing its domestic market share in volume share as well. It sold about 6.7 million units of iPhones in India in 2022, up from 4.8 million units in 2021 and 2.7 million units in 2020, as per IDC data.
The Rs 39,000-crore scheme was the first flagship PLI scheme and its success prompted the government to launch similar schemes in 14 sectors, such as automobile and auto components, IT hardware, telecom equipment and design, pharmaceuticals, solar modules, metals and mining, textiles and apparel, white goods, drones and advanced chemistry cell batteries.