It’s that time of the year when tech town is buzzing with news and opinions — good and bad — about Apple’s iPhones. Apple unveiled the all-new iPhone series on September 7 and since then there has been a lot of talk about what the iPhones bring and what they don’t. What remains constant is the aspirational value of an iPhone. What’s different this time is that Apple is ‘making’ the iPhone 14 in India. Apple has on record confirmed it and said that the company is “excited to be manufacturing iPhone 14 in India.” It’s not a new thing for Apple to ‘make’ iPhones in India. However, this is the first time a ‘new’ iPhone is being made in India. Here we deep dive into all the questions surrounding the iPhone 14 being made in India
The whole ‘made’ in India iPhone phenomena
Let’s get one thing clear from the onset — Apple doesn’t make any iPhones in India. What Apple does is that it assembles iPhones in India. Now if you are wondering what the difference between the two is then here it goes. A so-called ‘made’ in India iPhone has absolutely nothing in it that is actually made in India. What Apple does is that it sources the various components that are found in the iPhone from several other countries. Those components are then assembled together in India and the end result that you get is a ‘made’ in India iPhone. So in the most literal sense, iPhones are assembled in India and not really made in India. And it is not a new thing.
When did Apple’s ‘made’ in India journey start?
We have to go back to 2017 when the iPhone SE (first generation) was the first iPhone that was assembled in India. Apple’s manufacturing — one of the two — partner Wistron started assembling. What followed next was the iPhone 6s and in 2018 the iPhone 7 was getting assembled in India. What’s important to note here was that it wasn’t a new iPhone but older models. And in that sense, according to Navkendar Singh, associate vice president, Client Devices & IPDS, IDC India “Apple making iPhone 14 is a big deal because this is the N model and not N minus 1 or 2 as has been the case in the past.”
Foxconn — another Apple manufacturing partner — came on board in 2019 and started assembling the iPhone XR. The same year Apple halted — for good — the assembling process of the iPhone SE and iPhone 6S. Foxconn and Wistron then started assembling the iPhone 11 and iPhone SE (2020) in Chennai and Bangalore. iPhone 12 joined the list of ‘made’ in India iPhones in 2021 and now it’s the turn of the iPhone 14 and iPhone 14 Plus.
What Apple gets from assembling iPhones in India
Prabhu Ram, Head-Industry Intelligence Group (IIG), CyberMedia Research, believes that “with the start of the iPhone 14 production in India, Apple’s India market momentum will get a further fillip.” The festive season is underway and it will give Apple a further push. However, the iPhone 14 will be manufactured by Foxconn near Chennai and the ‘made’ in India units will go on sale later this year. It’s not clear when exactly that will happen. What Apple gets is that it has another avenue where it can assemble iPhones and not just be dependent on China. Apple saves about 20% import duty which the government of India levies on imported electronics items.
What does India get out of Apple assembling iPhones in India?
Apple is a marquee name — perhaps as big as it gets — and Singh believes that although India has done enough but not a lot to attract the likes of Apple. “India needs Apple — a marquee brand that is ‘manufacturing’ in India — and chances are that others will follow if Apple is seeing benefits then so can they,” says Singh. It is something that Ram of CMR agrees with. “With India getting further integrated into global value chains, other global majors will now seek to make in India for the world, seeing Apple’s success.” The government’s PLI incentives have certainly helped Apple look at India more seriously than earlier.
Will Apple’s dependence on China reduce in the coming years?
Broadly speaking, this is not the case of “China’s loss being India’s gain”. Singh is of the opinion that Apple remains heavily dependent on China. If anything then, “in fact, its dependence on China is getting stronger”, he says. China remains not just a key market for manufacturing for Apple but also for selling the iPhone. “Apple isn’t going to move out of China anytime soon,” he says. What India does is give Apple another destination for its manufacturing process, he adds.
It is something that analysts at JP Morgan also believe. According to a report by Reuters, JP Morgan believes that 5% of the total iPhone 14 volume production will happen in India. If you look at the bigger picture and include all Apple products’ manufacturing then it’s a mere 5% that happens outside of China. Analysts at JP Morgan believe that by 2025, about 25% of the manufacturing of Apple products could move outside of China. So China is, was and will continue to be a big part of Apple’s manufacturing plans for the next few years at least.
What benefits can Indian consumers expect out of ‘made’ in India iPhones?
In the short term, absolutely nothing. If you expect the price of the iPhones to drop just because they are made in India, it is not going to happen. It didn’t happen with the iPhone 7, iPhone SE or iPhone XR or iPhone 12. Why? As Singh puts it, “Apple is not known to drop prices plus iPhone 14 — unlike the iPhone 14 Pro models — is comfortably in stock.” Apple will get benefits but they are unlikely to be passed on to the customers. Instead, Singh feels that Apple could invest in marketing, and pass it on to channel partners but price drops are very unlikely.
It’s highly unlikely that even with all the noise around the whole ‘made’ in India phenomenon, customers will pay less for iPhones. This is because of multiple reasons. For starters, as we said, these phones don’t have any local components and are being assembled. The cost of producing an iPhone isn’t going to come down and as long as that doesn’t happen, it’s unlikely we will see a price drop.
It’s 5% of the total iPhone production that will happen in India and chances are Apple won’t be able to meet the local demand. Hence, you will still find a lot of ‘imported’ models being sold in India, so there’s zero chance of prices being dropped.
In a strange sense, it is a win-win for the government of India and it is mostly a win-win for Apple but not any win for the end customers.
The curious case of iPhones not getting ‘cheaper’
The price of iPhones in India when compared to most other countries is one of the highest. Assembling the iPhone — new and old — is unlikely to bring down the prices. On all the imported iPhones, Apple has to pay customs duties that are around 22%. Not just that, you have to add 18% GST further on the iPhones. All these taxes and duties drive up the price of the iPhone in India. Most of the iPhones that are sold in India end up being ‘imported’ models, hence the cost remains high. As Ram of CMR puts it, “There are a lot of variables that go into the product pricing and Apple has focused on affordability initiatives in India”. These initiatives end up being passed on to older models and not the new iPhone 14 series.
The whole ‘made’ in India iPhone phenomena
Let’s get one thing clear from the onset — Apple doesn’t make any iPhones in India. What Apple does is that it assembles iPhones in India. Now if you are wondering what the difference between the two is then here it goes. A so-called ‘made’ in India iPhone has absolutely nothing in it that is actually made in India. What Apple does is that it sources the various components that are found in the iPhone from several other countries. Those components are then assembled together in India and the end result that you get is a ‘made’ in India iPhone. So in the most literal sense, iPhones are assembled in India and not really made in India. And it is not a new thing.
When did Apple’s ‘made’ in India journey start?
We have to go back to 2017 when the iPhone SE (first generation) was the first iPhone that was assembled in India. Apple’s manufacturing — one of the two — partner Wistron started assembling. What followed next was the iPhone 6s and in 2018 the iPhone 7 was getting assembled in India. What’s important to note here was that it wasn’t a new iPhone but older models. And in that sense, according to Navkendar Singh, associate vice president, Client Devices & IPDS, IDC India “Apple making iPhone 14 is a big deal because this is the N model and not N minus 1 or 2 as has been the case in the past.”
Foxconn — another Apple manufacturing partner — came on board in 2019 and started assembling the iPhone XR. The same year Apple halted — for good — the assembling process of the iPhone SE and iPhone 6S. Foxconn and Wistron then started assembling the iPhone 11 and iPhone SE (2020) in Chennai and Bangalore. iPhone 12 joined the list of ‘made’ in India iPhones in 2021 and now it’s the turn of the iPhone 14 and iPhone 14 Plus.
What Apple gets from assembling iPhones in India
Prabhu Ram, Head-Industry Intelligence Group (IIG), CyberMedia Research, believes that “with the start of the iPhone 14 production in India, Apple’s India market momentum will get a further fillip.” The festive season is underway and it will give Apple a further push. However, the iPhone 14 will be manufactured by Foxconn near Chennai and the ‘made’ in India units will go on sale later this year. It’s not clear when exactly that will happen. What Apple gets is that it has another avenue where it can assemble iPhones and not just be dependent on China. Apple saves about 20% import duty which the government of India levies on imported electronics items.
What does India get out of Apple assembling iPhones in India?
Apple is a marquee name — perhaps as big as it gets — and Singh believes that although India has done enough but not a lot to attract the likes of Apple. “India needs Apple — a marquee brand that is ‘manufacturing’ in India — and chances are that others will follow if Apple is seeing benefits then so can they,” says Singh. It is something that Ram of CMR agrees with. “With India getting further integrated into global value chains, other global majors will now seek to make in India for the world, seeing Apple’s success.” The government’s PLI incentives have certainly helped Apple look at India more seriously than earlier.
Will Apple’s dependence on China reduce in the coming years?
Broadly speaking, this is not the case of “China’s loss being India’s gain”. Singh is of the opinion that Apple remains heavily dependent on China. If anything then, “in fact, its dependence on China is getting stronger”, he says. China remains not just a key market for manufacturing for Apple but also for selling the iPhone. “Apple isn’t going to move out of China anytime soon,” he says. What India does is give Apple another destination for its manufacturing process, he adds.
It is something that analysts at JP Morgan also believe. According to a report by Reuters, JP Morgan believes that 5% of the total iPhone 14 volume production will happen in India. If you look at the bigger picture and include all Apple products’ manufacturing then it’s a mere 5% that happens outside of China. Analysts at JP Morgan believe that by 2025, about 25% of the manufacturing of Apple products could move outside of China. So China is, was and will continue to be a big part of Apple’s manufacturing plans for the next few years at least.
What benefits can Indian consumers expect out of ‘made’ in India iPhones?
In the short term, absolutely nothing. If you expect the price of the iPhones to drop just because they are made in India, it is not going to happen. It didn’t happen with the iPhone 7, iPhone SE or iPhone XR or iPhone 12. Why? As Singh puts it, “Apple is not known to drop prices plus iPhone 14 — unlike the iPhone 14 Pro models — is comfortably in stock.” Apple will get benefits but they are unlikely to be passed on to the customers. Instead, Singh feels that Apple could invest in marketing, and pass it on to channel partners but price drops are very unlikely.
It’s highly unlikely that even with all the noise around the whole ‘made’ in India phenomenon, customers will pay less for iPhones. This is because of multiple reasons. For starters, as we said, these phones don’t have any local components and are being assembled. The cost of producing an iPhone isn’t going to come down and as long as that doesn’t happen, it’s unlikely we will see a price drop.
It’s 5% of the total iPhone production that will happen in India and chances are Apple won’t be able to meet the local demand. Hence, you will still find a lot of ‘imported’ models being sold in India, so there’s zero chance of prices being dropped.
In a strange sense, it is a win-win for the government of India and it is mostly a win-win for Apple but not any win for the end customers.
The curious case of iPhones not getting ‘cheaper’
The price of iPhones in India when compared to most other countries is one of the highest. Assembling the iPhone — new and old — is unlikely to bring down the prices. On all the imported iPhones, Apple has to pay customs duties that are around 22%. Not just that, you have to add 18% GST further on the iPhones. All these taxes and duties drive up the price of the iPhone in India. Most of the iPhones that are sold in India end up being ‘imported’ models, hence the cost remains high. As Ram of CMR puts it, “There are a lot of variables that go into the product pricing and Apple has focused on affordability initiatives in India”. These initiatives end up being passed on to older models and not the new iPhone 14 series.
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