India's ambition in the mobile phone manufacturing industry faces a heavy blow from "America First"

In recent years, India's mobile phone manufacturing industry has rapidly risen under the impetus of government incentive policies and investments from international technology giants. However, this ambition is facing severe challenges due to the new tariff policy proposed by U.S. President Donald Trump. On the 23rd, Trump announced the possibility of imposing at least a 25% tariff on smartphones not manufactured in the U.S. starting from the end of June 2025, specifically calling for Apple and Samsung to relocate their production lines to the U.S. This move has been described by Indian media as another blow to the "America First" policy, which could undermine India's vision of becoming a global mobile manufacturing hub.

"Enough to Crush a Billion Well-Designed Dreams"

In recent public speeches, Trump has repeatedly emphasized the "America First" strategy for manufacturing return, explicitly stating that he does not want Apple to build factories all over India, and referred to India as a "high-tariff country," implying that if Apple wants to enter the U.S. market, it should prioritize domestic production. Apple has accelerated its layout in India in recent years, with data showing that the total value of iPhones assembled in India reached $22 billion in the 12 months ending March 2025, a nearly 60% year-on-year surge, accounting for 20% of global production. Apple CEO Tim Cook stated in the latest earnings call in early May that most iPhones sold in the U.S. in the second quarter of 2025 will be produced in India, while China will remain the production base for most of Apple's products sold outside the U.S. However, the abrupt policy shift from the White House directly threatens Apple's supply chain strategy, which is now fraught with uncertainty due to tariff pressures.

"As India hopes to achieve results in tariff negotiations with the U.S., Trump has made India feel the 'sting'," commented an article in India Today on the 23rd, stating that Trump's tariff policy is "enough to crush a billion well-designed dreams," and that India's "Make in India" initiative is facing external resistance. The report noted that despite the pressure, Apple and Samsung are still pushing forward with localized production in India. Apple is expanding factories in Tamil Nadu and Karnataka through contract manufacturers such as Foxconn, Wistron, and Tata Electronics, with Foxconn recently investing heavily in building a new factory in India, planning to produce up to 25 to 30 million Apple phones in India by 2025. Ashwini Vaishnaw, India's Minister of Electronics and Information Technology, revealed that Apple exported iPhones worth over 1.5 trillion rupees (approximately 125.7 billion yuan) from India in the last fiscal year, aiming to showcase the potential of "Make in India." Samsung has also announced the production of the latest Galaxy S25 Edge in India and increased investment in its artificial intelligence research and development center.

However, behind the prosperity of India's mobile manufacturing industry lie multiple challenges. The first is the issue of overcapacity. Although India's annual mobile phone production capacity has exceeded 500 million units, the actual output is only about 250 million units, with nearly half of the capacity lying idle. Data from international consulting firm Counterpoint Research indicates that the growth rate of India's smartphone market will slow down in 2024, with domestic brands like Lava, Micromax is forced to transform or exit the market due to weak demand. Additionally, supply chain shortcomings restrict development. The iPhone 16 series assembled in India still relies on imported components, and the local component ecosystem has yet to mature. Research institutions point out that establishing a supply chain system in China took over a decade, and if India wants to replicate this model, it needs to invest more resources in infrastructure construction, technical worker training, and supplier network cultivation.

The U.S. government's tariff threats have also sparked intense discussions about cost-effectiveness. Analysts estimate that the cost of assembling an iPhone in India is about $30, while in the U.S., due to high labor costs, the assembly cost will soar to $390. Even with a 25% tariff, the cost of an iPhone made in India is still one-tenth of that in the U.S.

UBS analyst David Vogt believes that the impact of tariffs on Apple's profits is limited, potentially leading to a decline of 51 cents in earnings per share, but the cost surge from relocating production lines far exceeds this. Wedbush Securities analyst Dan Ives bluntly stated, "Producing iPhones in the U.S. is an unrealistic fairy tale," and if forced to relocate, the price of the phone could skyrocket from $1,000 to $3,000.

Investment Faces Stagnation or Repatriation

Despite the tough stance of the Trump administration, the industry generally believes there is room for negotiation in tariff policies. Wells Fargo analyst Aaron Ricks analyzed in an interview with U.S. CNBC on the 23rd that in the face of Trump's wavering tariff policies, Apple may pass on tariff costs through price increases while negotiating partial tariff exemptions with the U.S. government. Moreover, the production incentive program offered by the Modi government in India remains key to attracting foreign investment. This program reduces production costs for companies through subsidies, and companies like Foxconn and Samsung have already qualified. The India Electronics and Semiconductor Association expects that as supporting industries like semiconductors take root, the local supply chain will gradually improve.

The changes in the global trade landscape also present opportunities for India. Apple supply chain analyst Ming-Chi Kuo stated that India is valued by some companies due to its labor cost advantage and market size. Counterpoint data shows that in the first quarter of 2025, Apple's sales in India reached 3 million units, setting a historical high, with its high-end market share stabilizing at 58%. Installment payment and e-commerce discount strategies further stimulated consumer demand. Meanwhile, Samsung's share of smartphone production in India reached 20%, planning to consolidate its market position through artificial intelligence technology. Analysts believe that even in the face of tariffs, the cost advantage of manufacturing in India is still difficult to replace by the U.S.

"Can India replace China's iPhone?" An article published on the 23rd by the "Deutsche Welle" website, written by a correspondent in India, reported that Shesh, the founder of consulting firm LegalWiz.in, stated that for India to transform into a truly independent manufacturing center for Apple, it needs to make significant investments in infrastructure, skills, and technology. Shesh believes that if Apple shifts most of its product manufacturing from China to India, it may face obstacles in technology and expertise transfer. He emphasized, "It is very naive to expect that China's expertise, skills, and production machinery in mobile phone manufacturing can be transferred at the speed some people envision." IndieSemic co-founder and CEO Shah believes that if India wants to meet the future production demands of all iPhones, the ecosystem of the supply chain needs to be strengthened. He stated that the increase in iPhone production provides India with an opportunity to enhance its position in the global electronics manufacturing network, "but ultimate success will depend on how to address the long-standing infrastructure bottlenecks and policy constraints that have hindered the competitiveness of Indian manufacturing."

According to a report by Deutsche Welle, as India takes a step towards its long-term dream of becoming the "world's factory," Washington and Beijing have recently reached a temporary trade "reset," which could undermine India's ambition to replace China as the global manufacturing hub. The BBC reported that with the agreement reached between China and the U.S. in Switzerland, tariffs imposed by Trump on China dropped overnight from 145% to 30%, while tariffs on India are at 27%. Therefore, Ajay Srivastava from the Global Trade Research Initiative (GTRI) in India believes that manufacturing investment shifting from China to India may stagnate or reverse.

Need to Build an Industrial Ecosystem

Zhang Jiadong, a professor at Fudan University's American Studies Center, told Global Times reporters that there are four main favorable factors for India's development of the mobile phone manufacturing industry: first, a large consumer market that can provide a source of power for industrial development. India has a population of about 1.4 billion, with approximately half under the age of 29, creating significant potential demand for smartphones; second, labor, as India has a large labor force and the skills of the working population are developing rapidly; third, the industrial chain, as India's manufacturing industry has a certain foundation after decades of development and has been actively investing in the mobile phone industry chain in recent years; fourth, the international environment is relatively favorable. Zhang Jiadong believes that India's main shortcomings in mobile phone manufacturing are twofold: on one hand, India's industrial chain is not yet complete, with a very high dependence on the East Asian mobile phone industrial chain, requiring many components to be imported, which raises the final cost of mobile phones in India, especially compared to China; on the other hand, the support from the Indian government is limited and still appears insufficient compared to countries like China.

Xiang Ligang, chairman of the Zhongguancun Information Consumption Alliance, told Global Times reporters that for products like mobile phones that are produced on a large scale, the level of automation on the assembly line is already very high, and personnel wages do not significantly affect costs. Instead, the most significant impact on costs comes from the level and capability of industrial clustering and infrastructure. India's biggest problem is its relatively poor infrastructure capability, which means lower efficiency and weaker integration capability.

On the 24th, the Associated Press reported that in the turmoil caused by the rapid rise of artificial intelligence, the future planning of tech companies like Apple is becoming increasingly difficult. As artificial intelligence becomes more complex, it may give rise to a new wave of technological device innovations, thereby reducing the demand for smartphones. The report cited recent comments from Apple executive Eddie Cue, stating that the rapid development of artificial intelligence could lead to "screenless devices," and that smartphone demand may face transformation in ten years. This trend adds uncertainty to India's manufacturing industry—if the current heavy investments in capacity cannot be timely shifted to new technologies, it may lead to greater resource waste. Additionally, ongoing uncertainty in U.S. policies continues to affect corporate decision-making The tariff threat is seen by some analysts as a "negotiation chip" for the White House, and the erratic trade policies of the United States have put companies like Apple in a dilemma.

The Economic Times of India reports that the expansion of India's mobile phone manufacturing industry faces both opportunities and challenges. On one hand, increased investment from international giants and government policy support inject momentum into the industry; on the other hand, external tariff barriers, internal overcapacity, and pressure for technological transformation pose multiple challenges. The Indian website "Entrepreneur" states that Apple's ability to produce on a large scale in China is due to the ecosystem built there. To replicate this system, India needs to focus on infrastructure development, create a robust supply chain of components, and cultivate a large skilled workforce to meet the demands of the evolving ecosystem.

Authors of this article: Yuan Jirong, Yang Shuyu, Source: Global Times, Original Title: "India's Ambition in Mobile Phone Manufacturing Industry Hit Hard by 'America First'"

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