The government’s production-linked incentive scheme aims to “boost domestic manufacturing, investments and export in the telecom and networking products”. The scheme also includes mobile phones and this may drive Apple to shift at least 18% of its global iPhone production to India by the financial year 2025. According to a report by Bank of America (spotted by Economic Times), the Cupertino-based tech giant would be able to expand further in the country. This will be possible if the larger scale incentivises its vendors to also expand in the country, the report noted.
Earlier, reports suggested that Apple has increased iPhone production in India from 1% in 2021 to 7% in 2023. Previous reports also mentioned that Apple wants to manufacture 25% of iPhones sold globally in India by 2025.
PLI scheme for mobile phones
The report claims that the PLI scheme for mobile phones can help India meet its target. The country is aiming to triple its domestic production to $126 billion. With the PLI scheme, government wants to achieve five times growth in exports to $55 billion, by FY2026.
The report added that mobile phones are 21.5% of India’s electronics domestic demand. This massive demand is also growing at 15% CAGR, the report noted. The report noted that the mobile phone PLI scheme is a success story and noted, “Since FY17, mobile phone production/exports are up 3.9x/65x, while imports are down to a third”.
India’s ‘electronic’ need
As per the report, India consumed $158 billion worth of electronic goods in FY2023. The demand grew at 11% CAGR over FY17-23. However, most of the supplies were covered by imports. In FY23, India’s electronics imports stood at $77 billion. It was also the second-largest import bill that represented 20% of the country’s trade deficit, the report mentioned.
The analysis suggested that 70% of the mobile phone’s cost which includes the display, memory and semiconductors is difficult to localise. Such arrangements require huge capex and high-end technology.
However, the report added that the Rs 38,000-crore PLI scheme had helped to improve the export mix in local production. For this scheme, electronic exports have increased from 16% on-year to 25. This has helped India to become a “credible global supply chain alternative” for mobile phones and electronics manufacturers.
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