India Can Meet USA's iPhone Demands, But Challenges Remain India needs to focus on infrastructure, a developed component supplier ecosystem, and a massive skilled workforce to cater to this developing ecosystem

Apple CEO Tim Cook confirmed that India will be the country of origin for most iPhones sold in the US in the June quarter as Apple reroutes its supply chain away from China. Not only in the quarter, but going forward, Apple looks to deliver most of its iPhone demands from India: India could produce nearly $40 billion worth of iPhones by value in FY26, with 80 percent of that output intended for export to the US. The big question: Is India prepared to deliver on this? Apple's manufacturing strategy for iPhones has mostly been countries where they get benefits on manufacturing, geographical advantage, government incentives, costs, and good domestic demand.

Today, Apple produces around 16 to 17 percent of their global demand for iPhones in India. "Meeting the demand for the June quarter, won't be an issue. However, when it comes to meeting the growing annual demand, India has to double its production capacity. This is a target that would be difficult to fulfill in 18 months. Cook's statement underlines that they are seriously considering to ramp up the capacity in India and double it in next two, two and a half years. Expanding the production lines will need, machines and engineers coming from China, who will set it up in India. This will need ease of geopolitical corridors so that you allow the flow of skill set. Cost is not the only reason why Apple has vast production in China, it is because of the ecosystem. India needs to replicate that system in order to meet the growing demand," said Navkendar Singh, AVP, Devices Research, IDC Asia Pacific.

In India, iPhones are assembled by three primary contract manufacturers: Foxconn, Pegatron Corp, and Tata Group (formerly Wistron). Foxconn is the largest manufacturer, handling the majority of iPhone assembly in India. Together, these three facilities contribute significantly to Apple's growing "Make in India" production and each run in full capacity.

Meeting the demand won't be a smooth ride. The key challenges that India needs to focus on are infrastructure, a developed component supplier ecosystem, and a massive skilled workforce to cater to this developing ecosystem. Recently, the government announced the Electronics Component Manufacturing Scheme (ECMS), aimed at strengthening India's electronics manufacturing ecosystem.

"Apple has been doing a lot of groundwork in India, which has helped it successfully manage some of the US iPhone demand from its India production facilities. India not only offers government support and lower costs than China, but it also has English-speaking software engineers and a big pool of consumers. India is the second-largest smartphone market in the world, and it could potentially be the largest," said Senior Analyst, Prachir Singh, Counterpoint Research.

Singh emphasized that in terms of capacity, India has enough to potentially meet all US iPhone demand in the future, "But the ecosystem needs to be ramped up. We will see more efforts towards this, as well as products beyond iPhones. We expect made-in-India iPhones to account for 25-30 percent of global iPhone shipments in 2025, as compared to 18 percent in 2024," he added.

As Apple looks to diversify and expand operations in India, there should be enough capacity planned to serve both domestic as well as export demand. "The domestic consumption would increasingly benefit with as Apple's partners grow in scale, enjoy the PLI incentives and overall lower the TCO and manufacturing costs which gives Apple more room to go aggressive with domestic pricing especially for more expensive models such as Pro and Pro Max. So, it's a win-win for everyone," said Neil Shah, industry analyst & co-founder at Counterpoint Research.

Navkendar Singh, however, expressed concerns, and noted if India wants to meet domestic demands amid global requirements, ramping up capacities at the earliest is a necessity. Or the other way round, would be to meet the domestic consumption through units from China if the pricing allows, he pointed. Other important export markets of iPhones from India, apart from the US are, Netherlands, Italy, the Czech Republic, Japan, Turkey, the UK, and the UAE.

Apple registered the highest year-on-year (YoY) growth of 23 percent amongst the top five brands, shipping a first-quarter record of three million units in 1Q25. iPhone 16 was the highest shipped model, accounting for 4 percent of overall India shipments during the quarter, according to a IDC report. Lower tariffs compared to China and Vietnam are positioning 'Made in India' devices as a more cost-effective option for US importers, while the potential for enhanced bilateral trade between the US and India could further strengthen the country's appeal as a global smartphone manufacturing hub.

India's smartphone market is expected to grow at a low single-digit rate this year, driven by a favorable economic outlook and increasing global interest in Indian manufacturing. Apple is expected to register double-digit growth in terms of units, driven by the premiumization trend, noted Counterpoint Research.