India Remains Cost-Effective for iPhone Manufacturing Despite Proposed U.S. Tariffs

A GTRI report reveals that despite a potential 25% U.S. tariff on Indian-made iPhones, manufacturing costs in India remain significantly lower than in the U.S. due to lower labor costs and government incentives. The report highlights the global value chain's role in keeping India's production economically viable.

A recent report by the Global Trade Research Initiative (GTRI) has found that even with a proposed 25 per cent tariff imposed by the U.S. on iPhones manufactured in India, production in the South Asian country would still be economically favorable compared to the United States.

This revelation follows a statement by U.S. President Donald Trump, who threatened the tariff if Apple decides to manufacture its iPhones in India. The GTRI report highlighted how India's low labor costs make it a competitive option in the global value chain, outlining the various contributions from more than a dozen countries in assembling an iPhone.

Significant inputs include USD 450 retained by Apple, USD 80 from U.S. component suppliers, USD 150 from Taiwan for chips, and other parts from South Korea, Japan, and others, adding up to a retail price of USD 1,000.

Despite China and India's significant roles in assembly, they only earn USD 30 per iPhone, less than 3 per cent of the retail price, emphasizing India's economic advantage, particularly given the new Production-Linked Incentive scheme.

Labor costs further highlight this advantage, with Indian labor being considerably cheaper than in the U.S., cutting assembly expenses to USD 30 per unit in India compared to USD 390 in the U.S.

The study emphasized that if Apple were to shift production stateside, profits could dramatically drop unless retail prices are hiked, reinforcing India's cost-effectiveness for iPhone manufacturing amidst potential trade restrictions.

(With inputs from agencies.)