Being a brand of Apple’s magnitude means that the aspirational value of its products is infinitely more compared to most other brands. Hence, the idea of owning a ‘made’ in India iPhone strikes a chord on multiple levels. But what exactly does made in India iPhone mean for all parties — Apple and consumers. We try to break down the made in India iPhone phenomena:
Is Apple really ‘making’ iPhones in India?
In the most literal sense, no. Apple is actually assembling iPhones in India. And it’s not a new thing. An iPhone assembled in India means that Apple is still sourcing all the components from various parts of the world. These components are again made in several other countries. Simply put, Apple gets all its components from various sources to India and then the iPhone is assembled — and not really made — in India.
When did Apple start assembling iPhones in India?
Apple first started assembling iPhones in India in 2017 with the iPhone SE through its manufacturing partner Wistron in Bangalore. In 2018, Wistron started assembling the iPhone 6s in Bangalore as well. A year later, it was the turn of the iPhone 7 to get manufactured in Bangalore.
In 2019, another Apple manufacturing partner — Foxconn — came aboard and the iPhone XR also joined the list of iPhones assembled in India. It was in 2019 when Apple stopped assembling the iPhone SE and iPhone 6s. In 2020, the iPhone 11 and the ‘new’ iPhone SE were being assembled by Foxconn and Wistron in Chennai and Bangalore respectively. Apple has now confirmed that the latest iPhone 12 will also be ‘made’ in India very soon.
How will assembling iPhones in India help Apple?
According to Prabhu Ram, Head-Industry Intelligence Group (IIG), CyberMedia Research, the iPhone 12 will help Apple in “building on its growth momentum in the run-up to the all-important festive season in India, later this year.” Ram further says that “Apple continues to gain strength in India on the back of its enduring aspirational appeal, prudent pricing and aggressive marketing initiatives.” Assembling more models of iPhones in India will give Apple an overall boost as well.
Will the iPhones become cheaper in India anytime soon?
No. It’s highly unlikely that even with all the noise around the whole ‘made’ in India phenomena, customers will pay less for iPhones. This is because of multiple reasons. For starters, as we said, these phones don’t have any local components and are being assembled. The cost of producing an iPhone isn’t going to come down and as long as that doesn’t happen, it’s unlikely we will see a price drop.
Apple has made it clear — at least with iPhone 12 — that it will help meet the demand for the local audience. But for all other models, Apple isn’t in the position to meet the local demand. Hence, you will still find a lot of ‘imported’ models being sold in India, so there’s zero chance of prices being dropped. “If Apple were to choose to pass some of the cost benefits onto consumers, they will see a further uptick in their India performance,” Ram believes.
Will the consumers see any benefit of iPhones being ‘made’ in India?
Shilpi Jain, research analyst, Counterpoint Research, believes that with locally assembled iPhone 12, chances are that there might be a steady supply of the smartphone. “What this could mean is that buyers could get better deals, offers on e-commerce sites and might find older and new iPhones at discounts,” says Jain. Jain also believes that Apple’s aspirational value means that even though the price is important, there will always be a section of buyers that will pay a premium for the iPhone. “The cost might not come down but people are willing to pay a premium for Apple — be it in India or anywhere,” she adds.
Why do iPhones remain so expensive in India?
The price of iPhones in India when compared to most other countries is one of the highest. Assembling the iPhone — new and old — is unlikely to bring down the prices. On all the imported iPhones, Apple has to pay customs duties that are around 22%. Not just that, you have to add 18% GST further on the iPhones. All these taxes and duties drive up the price of the iPhone in India.
What benefit does Apple get by assembling iPhones in India?
First of all, by assembling iPhones in India, Apple saves about 20% import duty which the government of India levies on imported electronics items. Now, if you are wondering if that’s the case then why are prices not being reduced? That’s because all the iPhones sold in India are — or are unlikely to be in the near future — not the ones that are assembled in India. The supply may increase in future but as of now, it remains limited.
Further, the idea of opening an Apple Store has always been a burning issue for Apple and by assembling iPhones in India, Apple meets the criteria of local manufacturing. So by boosting its India presence, Apple comes closer to opening the first Apple Store in India.
Jain of Counterpoint believes that assembling iPhones in India further reduces Apple’s dependency on China. “In the post-pandemic world, for companies like Apple, it is essential to look at other avenues where they can save costs and reduce their China dependence.”