Apple Faces Hurdles in Shifting Manufacturing to India: High Costs, Low Margins Create Dilemma

 

Despite Apple's increasing interest in shifting a larger portion of its manufacturing from China to India, the path is far from easy. According to a recent report by the American think tank Economic Policy Institute, the cost of labor and production dynamics in India pose significant challenges to a complete shift.

 

A striking revelation from the report states that Indian workers earn 13 times less than their American counterparts, yet the manufacturing contribution from India to a $1,000 iPhone is just about $30, as compared to $390 in the U.S. This disparity in value addition has raised concerns about India's current readiness to handle high-end production like Apple's A-series chips.

 

The report warns that if Apple were to completely relocate its chip production from the U.S. to India, the cost of iPhones could rise significantly—by $100 to $130 per unit. This would have a direct impact on global sales, as pricing remains one of the most sensitive factors in the smartphone market.

 

Experts also point out that Indian electronics production still relies heavily on imported components. For India to truly become a self-reliant manufacturing hub, the country would need to adopt and scale deep-tech capabilities, especially in areas such as semiconductor design, packaging, and fabrication.

 

Although Apple has been gradually expanding its assembly operations in India, the country still lacks the comprehensive ecosystem that China offers. The shift will require substantial investment in infrastructure, talent development, and policy support.

 

Until then, Apple and other global tech giants may continue to diversify manufacturing but will likely retain core production capabilities in more established locations like the U.S. or Vietnam.