Apple significantly expanded iPhone production in India in 2025, increasing output by about 53% as the company seeks to reduce its dependence on China and mitigate tariff risks. Bloomberg, citing people familiar with the matter, said Apple assembled about 55 million iPhones in India last year, up from 36 million in 2024. Apple produces about 220 million to 230 million iPhones annually worldwide, with India now accounting for roughly a quarter of total output.
Incentives drive manufacturing expansion
Apple has accelerated its expansion in the world's most populous country in recent years, supported by production-linked incentives introduced by Prime Minister Narendra Modi to promote domestic electronics manufacturing. The subsidies have helped offset structural disadvantages in India, including higher logistics costs and the absence of a supply chain ecosystem comparable to China's.
In 2025, shipments from China — where Apple still manufactures the majority of its iPhones — faced headwinds from US tariffs linked to trade tensions between Washington and Beijing. The levies pushed Apple and its suppliers to shift a larger share of devices intended for the US market to alternative manufacturing locations, with India emerging as a major hub. Apple declined to comment.
Despite the progress, electronics assembly and component manufacturing in India still cost more than in countries such as China and Vietnam. The narrowing cost gap has nonetheless prompted Apple, Samsung Electronics and other manufacturers to seek additional government support. Companies are discussing another round of incentives with New Delhi to support export growth, with existing smartphone production subsidies set to expire on March 31. Bloomberg said India may need to move quickly to remain cost competitive after a US court ruling struck down some duties affecting China.
Cupertino, California-based Apple now assembles all variants of its latest iPhone 17 lineup in India, including the high-end Pro and Pro Max models. Its manufacturing partners in the country — Foxconn Technology Group, Tata Electronics and Pegatron — also produce earlier models such as the iPhone 15 and iPhone 16 for both local sales and export. The rising output underscores Apple's long-term strategy to establish India as a second major iPhone manufacturing base serving global demand. The company is also expanding local supplier partnerships to produce components including lithium-ion cells, watch and phone enclosures, and accessories such as AirPods.
India tax policy eases equipment investment
India has also introduced policy changes aimed at supporting electronics manufacturing investment. Reuters reported that the country will allow foreign companies to provide machines to their contract manufacturers in certain areas for five years without triggering tax risks. The change was announced as part of Finance Minister Nirmala Sitharaman's 2026–27 annual budget and is intended to encourage investment in electronics manufacturing.
Apple had lobbied India's government to modify income tax rules to ensure the company would not face tax liabilities for owning high-end machinery supplied to its contract manufacturers. Under earlier rules, Apple was concerned that paying for equipment used by contractors could create a "business connection" under Indian law, potentially exposing the company to taxes on iPhone sales profits.
The change means foreign firms providing machinery used by local manufacturers will be exempt from such taxes for five years. Revenue Secretary Arvind Shrivastava said at a press conference that the policy is intended to provide greater certainty for global companies. Smartphone manufacturing is a key part of Modi's strategy to drive economic growth. The exemption will apply until the 2030–31 tax year and only to factories located in customs-bonded areas, which are treated as being outside India's customs border. Devices sold within India from such facilities would still attract import duties, making them primarily suited for export production.
The policy change could prompt Apple and other companies to invest more quickly in electronics manufacturing by taking on the upfront cost of expensive machinery, reducing the financial burden on contract manufacturers. "This exemption removes a key deal-breaking risk for electronics manufacturing in India," Shankey Agrawal, a partner at tax-focused law firm BMR Legal, told Reuters. "The result is faster scale-up and greater confidence for global electronics players to manufacture in India." Reuters said Apple did not immediately respond to a request for comment. The earlier rules did not affect Samsung Electronics, whose smartphones in India are largely produced at its own factories rather than by contract manufacturers
Article edited by Joseph Chen
