How Trump’s tariffs may influence Apple’s ‘Make in India’ plan – Firstpost

India’s ambition to place itself as a worldwide iPhone manufacturing hub has come below strain following the Trump administration’s announcement of
sweeping “reciprocal tariffs” on over 180 international locations.

India, which at present accounts for round 14 per cent of world iPhone meeting in keeping with the Financial Survey 2023-24, has been
hit with a 26 per cent tariff.

Whereas that is decrease than the 54 per cent imposed on China and the 46 per cent on Vietnam, Indian officers and trade our bodies are fearful in regards to the long-term fallout on electronics exports and manufacturing momentum.

“The 26 per cent tariffs imposed by the US current a big problem to India’s exports… Whereas India is best positioned than many different economies, these tariffs can probably influence home industries, disrupt commerce flows, and squeeze revenue margins,” stated Ashok Chandak, President of the Indian Electronics and Semiconductor Affiliation (IESA), as quoted by Doordarshan.

The US is India’s largest buying and selling associate, accounting for 18 per cent of its whole items exports.

The newly imposed tariffs may put in danger the nation’s fast-growing electronics sector — particularly smartphone exports led by Apple’s manufacturing companions equivalent to Foxconn, Tata and Pegatron.

Apple’s India guess: Nonetheless the “least unhealthy” choice

Apple has relocated as much as 15 per cent of its iPhone manufacturing to India and plans to extend that share to 25 per cent by 2025.

Bernstein analysts estimate that India may attain 15–20 per cent of whole iPhone manufacturing by the tip of 2025, reported CNBC. This shift is a part of a broader technique to diversify away from China amid geopolitical tensions and now, extreme tariff hikes.

Whereas Apple has not issued an official assertion in regards to the tariff coverage, its inventory dropped greater than 8 per cent following the announcement — marking its worst single-day efficiency since 2020.

Evercore ISI analysts estimate that round 10 per cent to fifteen per cent of iPhones are at present assembled in India. However whilst India turns into a extra vital base, the tariffs may throw a wrench in Apple’s price and pricing fashions.

The Cupertino tech large faces a 54 per cent import responsibility on merchandise coming from China, making India the “least unhealthy” various for now. A senior trade official informed The Occasions of India, “There’s an actual likelihood corporations may start shifting new manufacturing to international locations with decrease tariff publicity.”

Larger costs, squeezed margins

For Apple, the monetary implications are stark. Rosenblatt Securities estimates counsel that the bottom mannequin iPhone 16, which launched within the US at $799, may see a value improve of as much as 43 per cent — pushing the price to $1,142 if Apple decides to cross on the added bills to prospects.

The premium
iPhone 16 Professional Max may attain practically $2,300, or ₹1.9 lakh in Indian forex. The iPhone 16e, a finances mannequin launched to advertise Apple’s AI choices, may soar from $599 to $856 below the identical price pressures.

These projections spotlight the squeeze on Apple’s pricing technique, notably as gross sales sluggish and new AI options fail to generate vital pleasure.

With the US, China, and Europe being Apple’s largest markets, such tariff-driven price surges may dampen demand.

India’s strategic commerce diplomacy play

Whereas India stays in a comparatively higher place in comparison with friends like China and Vietnam, it isn’t proof against the broader strategic shifts in international commerce.

The Indian Mobile and Electronics Affiliation (ICEA) has flagged that a number of nations — together with Brazil, Turkey, Saudi Arabia and the UAE — have secured decrease tariffs, largely round 10 per cent or much less. Saudi Arabia and the UAE, specifically, are thought-about short-term threats on account of leaner provide chains and aggressive labor prices.

“There’s an actual likelihood corporations may start shifting new manufacturing to international locations with decrease tariff publicity,” a senior trade official warned. The official informed The Occasions of India, “The shift to low-tariff international locations could occur to soak up the influence of excessive manufacturing prices, which may stoke inflation and cut back demand within the US.”

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In opposition to this backdrop, India is hoping to fast-track a bilateral commerce settlement (BTA) with the US to safeguard its pursuits. “Help from companies equivalent to Apple, Microsoft and Google could also be sought… to bolster India’s pitch throughout BTA negotiations with the Trump administration,” a senior trade official informed The Occasions of India.

With practically ₹1 lakh crore price of iPhones exported between April and January — up from ₹60,000 crore in the identical interval final yr — India has proven outstanding progress. Nevertheless, whether or not this trajectory can proceed within the face of world commerce tensions stays to be seen.

Regardless of the challenges, India continues to draw multinational giants trying to diversify away from China.

Authorities incentives below the PLI scheme have performed a serious position, with Apple’s companions receiving over 75 per cent of the practically ₹8,700 crore disbursed thus far.

With inputs from companies