Apple assembles 14% of global iPhones in India for FY24, boosts electronics export ranking

In FY24, Apple assembled 14% of its global iPhones in India, significantly enhancing the country's electronics export ranking.

The Economic Survey 2023-24 presented in Parliament by Finance Minister Nirmala Sitharaman highlighted substantial growth in the mobile phone segment, with exports to the US rising from USD 2.2 billion in FY23 to USD 5.7 billion in FY24.

According to the survey, Apple produced iPhones worth USD 14 billion in India during FY24. This move is supported by Foxconn, which has commenced production of Apple mobile phones in Karnataka and Tamil Nadu.

India's share in global electronics exports improved from 0.63% in 2018 to 0.88% in 2022, raising its export ranking from 28th to 24th in the same period. Electronics goods' contribution to India's merchandise exports grew from 2.7% in FY19 to 6.7% in FY24.

The survey noted significant growth in India's electronics manufacturing sector since 2014, holding an estimated 3.7% of the global market share in FY22 and contributing 4% to India's total GDP in the same fiscal year. Domestic production of electronic items surged to ₹8.22 lakh crore, with exports increasing to ₹1.9 lakh crore in FY23.

India has become an attractive destination for investments in electronics, establishing substantial manufacturing capacities over the past five years. The Economic Survey identified smartphone manufacturing as a key sector benefiting from the "China plus one" strategy, influenced by geopolitical sentiments.

The government's Production-Linked Incentive (PLI) scheme, offering tax breaks and subsidies, has played a pivotal role in attracting companies to invest in India. Rising domestic demand for smartphones has also been a significant factor in these investment decisions.

Although India may not immediately benefit from trade diversion away from China, it has seen a marked increase in electronic exports due to the PLI scheme. For example, India's electronic exports to the US shifted from a trade deficit of USD 0.6 billion in FY17 to a trade surplus of USD 8.7 billion in FY24, highlighting a notable increase in value addition.

The survey referenced a study by the Centre for Development Studies, indicating substantial increases in domestic value addition (DVA), employment, and wages in the mobile manufacturing sector since FY17. The share of DVA in mobile phone output rose from an average of 8.7% between FY17 and FY19 to 22% between FY20 and FY22, reflecting increased local participation.

While the DVA as a ratio of exports may be low, involvement in global value chains (GVC) boosts overall value added due to economies of scale in manufacturing for the vast global market.

The direct workforce in mobile phone production more than tripled from FY17 to FY22, significantly benefiting female blue-collar workers.

Wages and salaries in the sector saw a 317% increase between the two phases.