Apple's Manufacturing Shift From India To US Would Cost The Company More: GTRI

New Delhi, May 17 (KNN) A recent report by the Global Trade Research Initiative (GTRI) suggests that if Apple CEO Tim Cook decides to relocate manufacturing operations from India to the United States, the company stands to lose more than India would. 

According to GTRI founder Ajay Srivastava, while India might lose some low-paying jobs, the country currently earns only about USD 30 per iPhone, much of which is returned to Apple as subsidies under the Production Linked Subsidy scheme.

India has been reducing tariffs on key smartphone components at the request of major companies like Apple, a move that reportedly harms domestic industries attempting to build a local manufacturing ecosystem. 

"For every iPhone sold at around USD 1,000 in the US, India's share is less than USD 30. Yet, in trade data, the full USD 7 billion export value adds to the US trade deficit," Srivastava explains.

Should Apple relocate its manufacturing operations, India might benefit by shifting focus toward new-age technologies rather than continuing with smartphone assembly lines. 

"If Apple's assembly moves out, India will be forced to stop propping up shallow assembly lines and instead invest in deeper manufacturing--chips, displays, batteries, and beyond," notes Srivastava.

The value chain of an iPhone made in India involves multiple countries. Of a USD 1,000 iPhone, approximately USD 450 represents the device itself.

US component manufacturers like Qualcomm and Broadcom receive about USD 80, Taiwan earns USD 150 for chip manufacturing, South Korea adds USD 90 for OLED screens and memory chips, and Japan contributes USD 85 for camera components. 

Other countries such as Germany, Vietnam, and Malaysia collectively account for another USD 45 in smaller parts.

Manufacturing nations like India and China receive merely USD 30 per device, less than 3 percent of the total cost. However, manufacturing facilities, while generating low value, create significant employment—approximately 300,000 workers in China and 60,000 in India. 

GTRI suggests this employment factor is driving Trump's push for Apple to shift manufacturing to the US.

Moving assembly operations from India would create entry-level jobs in the US, but production costs would increase substantially for Apple. 

Assembly workers in India earn an average of USD 290 monthly, whereas under US minimum wage laws, this would rise to USD 2,900—a 13-fold increase. 

The cost of assembling a device would jump from USD 30 to USD 390 per unit, potentially reducing Apple's profit per device from USD 450 to USD 60 unless iPhone prices increase, affecting American consumers.

Whether Tim Cook will sacrifice such a significant portion of Apple's profits to support American manufacturing or opt for a commercial decision remains uncertain. 

Questions persist about Trump's motivations—whether these statements represent pressure tactics to secure a favorable trade deal during ongoing negotiations, and why Trump hasn't asked Cook to relocate manufacturing from China, which still produces 85 percent of iPhones compared to India's 15 percent.

(KNN Bureau)