Apple is making a significant shift in its production strategy to mitigate the financial impacts of rising trade tensions. The tech giant has announced plans to relocate the assembly of the majority of iPhones sold in the United States to India. This move is driven by a desire to reduce Apple’s reliance on China, where 80% of iPhones sold in the US are currently manufactured.
Production Shift to India
Apple is reportedly in talks with key manufacturing partners, including Foxconn and India’s Tata Group, to increase production in India. By the end of 2026, the majority of iPhones for the US market are expected to be assembled in India, according to sources close to the matter.
This decision is largely driven by the ongoing tariff war between the US and China, particularly under former President Donald Trump’s administration, which imposed rising tariffs on Chinese goods. These tariffs have significantly impacted Apple’s costs, and relocating iPhone production to India is seen as a way to mitigate these financial challenges.
India as a Global Manufacturing Hub
Indian Prime Minister Narendra Modi has actively promoted the country as a global hub for smartphone manufacturing. To attract tech giants like Apple, India has introduced measures such as reducing import taxes on certain mobile phone components.
Babak Hafezi, CEO of Hafezi Capital, emphasized the importance of India’s competitiveness, stating, “By reducing import taxes on intermediary goods, the country positions itself to be a leading global manufacturing hub.”
In March 2025, Apple shipped a record $2 billion worth of iPhones from India, marking a significant milestone. However, despite this growth, India still produces only 20% of the world’s iPhones, which highlights the scale of the challenge Apple faces in shifting a large portion of its production to India.
Economic and Logistical Challenges
However, the shift of iPhone production to India presents several challenges. Manufacturing costs in India are 5-8% higher than in China, and India’s logistical hurdles could further drive up costs. Some analysts estimate that the transition could cost Apple as much as $30-40 billion and take several years to complete.
Dan Ives, an analyst at Wedbush Securities, cautioned about the move, saying, “While India will help, it will take years to reduce Apple’s dependence on China. The roadblocks are significant, and Apple is still caught in the middle of a complex tariff situation.”
Recent reports have also suggested that Chinese authorities are making it difficult for Apple’s suppliers to shift operations to India. Companies like Foxconn have faced delays in shipments, and export applications have been denied or delayed for months.
Read More: Apple’s AI Features Rollout Delayed
India’s Infrastructure Challenges
While India offers potential cost benefits, the country’s infrastructure issues pose a major challenge to large-scale production. Problems like traffic congestion and inefficiencies in mobility could increase production costs. Hafezi noted, “In order to be globally competitive, secure and efficient infrastructure is essential.”
Global Trade Implications
Apple’s decision to shift production comes amid ongoing trade discussions between the US and China, which are reportedly on the verge of a potential trade deal. Former President Trump mentioned that tariff reductions were discussed between the two countries, though China has denied these claims.
Meanwhile, trade discussions between the US and India are also progressing, with Vice President JD Vance meeting Indian officials to discuss a potential bilateral trade agreement. This growing economic relationship between the US and India may further facilitate Apple’s move, offering both financial incentives and strategic advantages.
In conclusion, while Apple’s shift to India represents a significant step in reducing dependence on China, it also comes with various logistical, economic, and political challenges. The success of this transition will largely depend on how well India can address its infrastructure issues and maintain a competitive manufacturing environment.
