Made in India iPhones to Remain Affordable in the US Despite Donald Trump’s 25 Percent Tariff: GTRI Report

Even if the United States imposes a 25 percent tariff on iPhones manufactured in India, the production cost will still be significantly lower compared to producing them domestically, according to a new report by the Global Trade Research Initiative (GTRI).

This comes after former U.S. President Donald Trump made a statement suggesting a 25 percent duty on iPhones should Apple decide to produce them in India. However, the GTRI report highlights that even under such trade restrictions, manufacturing iPhones in India remains a more cost-effective option.

Global Value Chain of an iPhone

The GTRI report provides a detailed breakdown of the current value chain for a $1,000 iPhone (approximately Rs. 83,400), which involves contributions from over a dozen countries. Apple retains the largest share of the value around $450 (approximately Rs. 37,530) per device — thanks to its design, software, and branding.

Key global contributions include:

• U.S. Vendors (e.g., Qualcomm, Broadcom): $80 (approx. Rs. 6,672)
  
• Taiwan (Chip manufacturing): $150 (approx. Rs. 12,510)
  
• South Korea (OLED screens, memory chips): $90 (approx. Rs. 7,506)
  
• Japan (Camera components): $85 (approx. Rs. 7,089)
  
• Germany, Vietnam, Malaysia (Various parts): $45 (approx. Rs. 3,753)

India and China, despite being major assembly hubs, receive just about $30 (approx. Rs. 2,502) per unit, which is under 3% of the iPhone’s retail price.

Labour Costs and Economic Viability

The primary reason iPhone production in India remains economical even with a 25% tariff lies in labour cost differentials. In India, assembly workers earn roughly $230 (Rs. 19,182) per month. In comparison, U.S. labour costs can rise to $2,900 (Rs. 2,41,860) per month, especially in high-cost states like California.

As a result, assembling an iPhone in India costs only about $30 (Rs. 2,502), compared to nearly $390 (Rs. 32,526) in the U.S. Moreover, India offers additional financial benefits through its Production-Linked Incentive (PLI) schemes for electronics manufacturing.

If Apple were to shift iPhone production to the U.S., its per-unit profit margin could drop dramatically from $450 (Rs. 37,530) to just $60 (Rs. 5,004) unless Apple significantly increases retail prices.

Conclusion: India Remains a Strategic Manufacturing Hub

The GTRI report underscores how India remains a competitive and strategic manufacturing destination for iPhones, even amid potential U.S. trade tariffs. Thanks to India’s lower labour costs and government incentives, Apple can continue to offer globally priced products without significantly affecting margins. Despite political uncertainties, India’s role in the global electronics value chain is set to grow, reaffirming its importance in the future of tech manufacturing.

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