Apple Likely To Shift 18 Per Cent Of iPhone Production In India By FY25: Bank Of America

Within two years of the PLI scheme, iPhone exports from India have risen to Rs 40,000 crore in FY23, BoFA said. It was Rs 11,000 crore in FY22

Currently, Apple has 14 vendors in India as compared to 151 in China.

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US tech giant Apple may shift over 18 per cent of its global production of iPhones to India by 2024-25 (FY25) on the back of the government’s production-linked incentive (PLI) scheme for mobile phones, Bank of America (BoFA) said in a report. India's share in global iPhone production in FY23 stood at 7 per cent. It was negligible before the PLI scheme was notified first on October 6, 2020. In the same year, the central government approved Foxconn Hon Hai, Wistron, and Pegatron, all of which are Apple's contract manufacturers in India.

The report said that the share of India in iPhone manufacturing may even increase if its vendors expand in India. "Apple's share may expand further if it incentivises its large scale vendors to also expand in India. Apple could also see share gains (4 per cent now) within India's mobile phone market by improving the affordability of locally made iPhones and shifting in favour of premium products. We see India contributing over 5 per cent of Apple's global iPhone sales by CY25 and register 21 per cent CAGR over CY22-25," it said.

The BoFA analysis suggested that 70 per cent of a mobile phone's cost, which includes the display, memory and other semiconductors, is hard to localise in the near term since it requires large capex and high-end tech.

Currently, Apple has 14 vendors in India as compared to 151 in China. Most of these vendors are located in south India, closer to the contract manufacturers, Foxconn and Pegatron (Tamil Nadu) and Wistron (Karnataka). The report revealed that within two years of the PLI scheme, iPhone exports from India have risen to Rs 40,000 crore in FY23. It was Rs 11,000 crore in FY22. This is expected to accelerate further as it has already reached a run-rate of $1 billion of monthly exports since February this year.

According to the BoFA report the Rs 38,000-crore PLI scheme has helped improve the export mix in local production from 16 per cent to 25 per cent, adding that this can enable India to become a "credible global supply chain alternative" for mobile phones and electronics.

Apple's decision to manufacture its latest iPhones here is a sign of growing confidence in India's potential to be one of the large manufacturing destinations, as it aims to diversify manufacturing outside of China, it said. The report also added that mobile phones are 21.5 per cent of India's domestic electronics demand and are growing at 15 per cent compounded annually. "Since FY17, mobile phone production/exports are up 3.9x/65x, while imports are down to a third," the report mentioned.