Apple’s ambitious pivot to shift iPhone production from China to India was meant to signal a new era in global manufacturing. But a surprise US-China trade détente may throw a wrench into India’s long-standing hopes of becoming the world’s next factory floor.
Just weeks ago, Apple stirred excitement in New Delhi by announcing that most iPhones bound for the US would now be made in India. The move was hailed as a validation of Prime Minister Narendra Modi’s “Make in India” campaign. But the optimism may be short-lived.
In a dramatic policy reversal, the US slashed tariffs on Chinese goods—from 145% to 30%—following a breakthrough agreement with Beijing in Switzerland. By contrast, tariffs on Indian goods remain at 27%, eroding India’s cost advantage.
Ajay Srivastava of the Global Trade Research Institute warns that this could cause investment to “stall or head back” to China, especially in high-value manufacturing. “India’s low-cost assembly lines may survive, but value-added growth is in danger,” he said.
The timing couldn’t be worse. Recent indicators showed India was beginning to fill the gap left by Chinese suppliers. Export orders surged to a 14-year high, and analysts at Nomura highlighted India’s growing role in electronics, textiles, and toys as global supply chains diversified.
Still, the tide may not fully turn against India. Structural tensions between the US and China persist, and many global companies remain wary of over-reliance on Beijing. India is also negotiating a trade pact with the US, which could rebalance the playing field.
Moreover, India’s recent trade deal with the UK suggests New Delhi is ready to shed protectionism in favour of greater openness—at least selectively.
But hurdles remain. India’s manufacturing sector continues to grapple with deep-rooted challenges: bureaucratic red tape, rigid labour laws, and sluggish infrastructure upgrades. Despite generous subsidies under the Production Linked Incentive (PLI) scheme, India’s manufacturing share of GDP remains stuck at around 15%.
Analysts caution that tariff gaps alone won’t drive long-term change. “India must back up its trade advantage with sweeping ease-of-doing-business reforms,” said Nomura’s Sonal Verma and Aurodeep Nandi.
For now, Apple’s India gamble hangs in the balance—caught between geopolitical resets and the hard realities of doing business on the subcontinent.
