The government’s production-related incentive scheme aims to “stimulate domestic production, investment and exports in telecom and networking products”. The scheme also includes mobile phones and they are allowed to drive Apple to be at least 18% of its global iPhone production to India by the fiscal year 2025. According to a report by bank of America (spotted by Economic Times), the Cupertino-based tech giant could expand further in the country. This will be possible if the increased scale incentivizes its suppliers to expand in the country as well, the report said.
Previously, reports suggested that Apple has increased iPhone production in India from 1% in 2021 to 7% in 2023. Earlier reports also stated that Apple aims to produce 25% of global iPhones sold in India by 2025.
Mobile phone PLI scheme
The report claims that the mobile phone PLI scheme can help India achieve its goal. The country aims to triple its domestic production to $126 billion. With the PLI scheme, the government aims to achieve a five-fold growth in exports to USD 55 billion by FY2026.
The report added that mobile phones make up 21.5% of India’s domestic electronics demand. This huge demand is also growing at a 15% CAGR, the report said. The report noted that the mobile phone PLI scheme is a success story, noting “Since FY17, mobile phone production/exports have increased by 3.9x/65x while imports have fallen by a third”.
India’s ‘electronic’ need
According to the report, India consumed $158 billion worth of electronic goods in fiscal year 2023. Demand grew at 11% CAGR in FY17-23. However, most supplies were covered by imports. In FY23, India’s electronics imports totaled $77 billion. It was also the second-largest import bill accounting for 20% of the country’s trade deficit, the report said.
The analysis suggested that 70% of the mobile phone’s cost, including the display, memory and semiconductors, is hard to pinpoint. Such schemes require massive capex and high technology.
However, the report added that the Rs 38,000-crore PLI scheme had helped improve the export mix in local production. Before this scheme, electronic exports increased from 16% year-on-year to 25. This has helped India become a “credible global supply chain alternative” for mobile phone and electronics manufacturers.
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