A recent report by the Global Trade Research Initiative (GTRI) indicates that even with the potential implementation of a 25 percent tariff on iPhones manufactured in India, the overall production costs would remain significantly lower compared to producing the devices in the United States.
The findings come in light of statements made by U.S. President Donald Trump, who has threatened to impose tariffs on iPhones if Apple proceeds with manufacturing in India. However, the GTRI’s analysis highlights the continued cost-effectiveness of Indian manufacturing despite these potential tariffs.
The report details the value chain of an iPhone priced at $1,000 (approximately Rs. 83,400), involving contributions from numerous countries. Apple claims the largest portion of the value, totaling about $450 (roughly Rs. 37,530) per device, attributable to its brand, software, and design capabilities.
In terms of component contributions, U.S. companies like Qualcomm and Broadcom add about $80 (around Rs. 6,672), while Taiwan contributes $150 (approximately Rs. 12,510) through chip manufacturing. South Korea supplies $90 (about Rs. 7,506) for OLED screens and memory chips, and Japan contributes components valued at $85 (nearly Rs. 7,089), primarily for camera systems. Additionally, Germany, Vietnam, and Malaysia provide smaller parts worth $45 (around Rs. 3,753).
The GTRI report also noted that, although China and India are pivotal in iPhone assembly, they only earn about $30 (approximately Rs. 2,502) for each device, which is less than 3 percent of the retail price.
The analysis suggests that manufacturing iPhones in India remains financially practical, even in the event of a 25 percent tariff. This is largely attributed to the stark contrast in labor costs between India and the U.S. In India, assembly workers earn around $230 (approximately Rs. 19,182) per month, while in states like California, labor costs can reach up to $2,900 (roughly Rs. 2,41,860) monthly due to minimum wage regulations, a difference of nearly 13 times.
Consequently, the cost of assembling an iPhone in India is approximately $30 (around Rs. 2,502), compared to about $390 (nearly Rs. 32,526) in the U.S. Furthermore, Apple benefits from the production-linked incentive (PLI) scheme offered by the Indian government for iPhone manufacturing.
If Apple were to relocate its production to the U.S., its profit per iPhone could plummet from $450 (about Rs. 37,530) to just $60 (around Rs. 5,004), unless retail prices are raised substantially.
The GTRI report underscores how global supply chains and disparities in labor costs position India as a competitive manufacturing hub, even amidst possible trade restrictions from the U.S.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
