The Global Trade Research Initiative (GTRI) found that even if the US imposed a 25% tariff on iPhones made in India, the overall cost of production would still be significantly lower than if the devices were made in the US.
Amid this, US President Donald Trump threatened to impose 25% tariffs on iPhones should Apple choose to manufacture them in India. Nevertheless, the GTRI analysis demonstrated that, despite these taxes, manufacturing in India is still economical.
The paper breaks down the value chain of a $1,000 (about Rs. 83,400) iPhone, which includes contributions from more than a dozen countries. Because of its design, software, and brand, Apple keeps most of the value, approximately $450 (about Rs. 37,530) for each device.
It also stated that Taiwan provides $150 (about Rs. 12,510) through semiconductor production, while US component manufacturers like Qualcomm and Broadcom contribute $80 (approximately Rs. 6,672). Japan provides components valued at $85 (about Rs. 7,089), primarily through camera systems, while South Korea contributes $90 (approximately Rs. 7,506) through OLED panels and memory chips. Malaysia, Vietnam, and Germany contribute an additional $45 (about Rs. 3,753) through smaller portions.
Despite being essential players in the iPhone assembly industry, China and India only make about $30 (approximately Rs. 2,502) each handset, according to GTRI. This represents less than 3% of the iPhone’s entire retail cost.
The research makes the case that even with a 25% tax, it is still profitable to manufacture iPhones in India.
The primary cause of this is the stark disparity in labor prices between India and the United States. Assembly workers in India make about $230 (about Rs. 19,182) a month. Still, minimum wage regulations in US states like California could cause labor expenses to skyrocket to almost $2,900 (about Rs. 2,41,860) monthly—a 13-fold increase.
Therefore, assembling one iPhone in India would cost about $30 (about Rs. 2,502). In contrast, it would cost about $390 (approximately Rs. 32,526) in the United States—additionally, Apple benefits from the government’s production-linked incentive (PLI) for iPhone manufacturing in India.
Unless retail prices are raised significantly, Apple’s profit per iPhone might drop sharply from $450 (about Rs. 37,530) to just $60 (about Rs. 5,004) if production were moved to the United States.
The GTRI analysis emphasized how, despite possible trade restrictions from the United States, India remains a competitive choice for manufacturing due to global value chains and labor cost discrepancies.
