Will the Indian iPhone export miracle become a one-time flash in the pan? There are three ways of examining and answering this key question. The first is the recent media briefing by US President Donald Trump and Apple CEO Tim Cook where the latter pledged to Make in America. To what extent will such endeavours impact ballooning Indian iPhone exports to the US? The second: how did a manufacturing laggard like India carve out the smartphone miracle? The third: why has India failed to replicate this in other sectors despite PLI (Production Linked Incentive) schemes?
The first answer is tricky. If the unpredictable Trump keeps his threat and India gets slapped by a 50 per cent (or even higher as he threatens) import tariff, Made In India iPhones and other smartphones will be at a competitive disadvantage with those made in Vietnam and China. To some extent, Apple’s plans of using India as a manufacturing base for smartphones supplied to the US market will be hit. Yet, giant multinationals like Apple don’t change strategic decisions based on the whims and fancies of a mercurial leader.
Apple took almost a decade in gradually building a manufacturing ecosystem in India. It is not going to abandon such efforts just because of Trump tantrums. Sure, there will be a change in tactics that hurts India in the short term. But there is not much chance of Cook abandoning the China-Plus-One strategy in the long term. Just look at the numbers. Between January and June 2025, iPhone shipments from India to the US were valued at a staggering $22 billion, which is about 10 per cent of the total merchandise goods exports. So, Apple is here to stay, despite temporary hiccups.
The second answer to seek is: how did this manufacturing and export miracle come about in a country that has consistently missed the proverbial bus? It is easy to forget that not too long ago, more than 90 per cent of smartphones used in India were imported. Today, about 98% are locally manufactured. Factories in India no longer just assemble the phones. An entire value-added supply chain is being rapidly created. In 2024, India became the third largest exporter of mobiles, generating $20.5 billion in revenues.
The rise has been steep and spectacular. But the moot point is: how did this come about? One needs to go back to the early 1990s when the then CEO of GE Jack Welch bet big on India as an outsourcing destination. It paid off, thanks to millions of skilled workers and benign policies that encouraged investors to make India a services sector powerhouse. Apple made a similar bet with Tim Cook at the helm. But the key reason for the success lies less with New Delhi and more with state capitals and local authorities in Tamil Nadu and Karnataka that have laid down the red carpet, and tried their best to cut red tape, both literally and metaphorically. Even Uttar Pradesh through NOIDA is doing the same.
The third answer is not very complicated. PLI schemes exist for several sectors. But beyond modest success in automobiles, India has failed to replicate the iPhone success in food processing, textiles or leather products. The reason is red tape, regulatory cholesterol and the absence of genuine second-generation reforms. Bangladesh exports of readymade garments are significantly higher than India. Labour laws are the key. So are land laws that discourage foreign investors, despite one-off exceptions like is the case with smartphones.
As so many are arguing that Trump tariffs, threats and tantrums can become a crisis-driven opportunity.
The author has worked for leading media houses, authored two books, and is now Executive Director, C Voter Foundation