How India is Becoming More of a Manufacturing Hub for Apple

Tata Electronics, a division of Indian multinational conglomerate Tata Group, has acquired a 60% controlling stake in contract manufacturer Pegatron Corporation's iPhone assembly facility in Tamil Nadu, India. 

The Taiwan-based Pegatron will retain a 40% share and provide technical expertise to the operation.

Currently, the facility employs 10,000 workers and produces approximately five million iPhones per year, which represents a significant expansion of Apple’s manufacturing presence in India.

The US technology giant has historically relied on Chinese manufacturing partners, particularly Hon Hai Precision Industry Co Ltd (Foxconn), for the majority of its iPhone production.

Tata's growing role in Apple's supply chain

The Tamil Nadu acquisition marks Tata Electronics' third iPhone manufacturing operation in India. The company previously purchased Wistron Corporation's iPhone assembly plant in Karnataka state and is developing an additional facility in Hosur, Tamil Nadu.

Such an expansion positions Tata Electronics as a direct competitor to Foxconn, which operates multiple iPhone manufacturing facilities across India. Foxconn, headquartered in Taiwan, is the world's largest contract electronics manufacturer and Apple's primary assembly partner globally.

The deal also strengthens Tata's position in Apple's supply chain, as the conglomerate seeks to establish itself further as a major electronics manufacturer. The company's electronics division has invested in manufacturing infrastructure and workforce development to meet Apple's production standards.

One of the reasons Apple is expanding into India is to rely less on Chinese supply chains. The expansion in India comes just as President-elect Donald Trump prepares to take office on January 20th 2025 and Trump has hinted at plans to implement tariffs of up to 40% on Chinese imports, building on policies from his previous administration which imposed 25% tariffs on US$34bn worth of Chinese goods in 2018.

As a result, Apple has accelerated its efforts to diversify its manufacturing base beyond the People’s Republic of China. The COVID-19 pandemic, which caused widespread disruption to global supply chains through port closures and production stoppages, has further influenced this strategic shift.

Indian development attracts mobile manufacturers

The Indian government's Production Linked Incentive (PLI) scheme, a policy framework that provides financial incentives to manufacturers based on production targets, has attracted investment from Apple's contract manufacturing partners including Foxconn, Pegatron and Wistron.

The initiative offers tax benefits and subsidies to electronics manufacturers who establish operations in India. This policy support, combined with India's workforce of 1.4 billion people and growing domestic smartphone market, has created conditions for expanded electronics manufacturing.

The domestic market's increasing demand for premium smartphones has also influenced manufacturing investment, as local production allows companies to avoid import duties on finished devices.

In response, Apple has developed relationships with local suppliers and contract manufacturers in India to establish a robust manufacturing ecosystem. These partnerships enable the company to maintain production standards while benefiting from local expertise and infrastructure.

Indian suppliers have also invested in quality control systems and manufacturing processes to meet Apple's specifications. This development of the local supply chain supports the expansion of electronics manufacturing capacity in India.

Local manufacturing enables Apple to avoid import duties on finished products, potentially reducing retail prices in the Indian market. This cost advantage could help the company compete more effectively in a market where smartphone pricing significantly influences consumer decisions.

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