The Problem with “Assembled in India”

Walk into any Apple Store today and pick up the latest iPhone. Flip it over and you will find a small line of text: “Assembled in India.” For many, that phrase is a source of national pride, a symbol of India’s arrival as a serious player in global electronics manufacturing. And in many ways, it is. The journey to get there has been genuinely impressive.

But the phrase also conceals an uncomfortable truth. Assembling a product and manufacturing one are very different things. Right now, India is doing a lot more of the former than the latter, and the gap between those two activities is where the real economic value sits.

The $50 Billion Milestone

By December 2025, cumulative iPhone exports from India under the government’s Production Linked Incentive (PLI) scheme crossed $50 billion, a figure confirmed by Indian government officials. This marks a dramatic rise in India’s role as a manufacturing hub and a key pillar in Apple’s strategy to diversify away from China. For context, Samsung exported devices worth about $17 billion across its entire five-year PLI term from FY21 to FY25. Apple crossed three times that figure in less time.

Apple’s manufacturing footprint in India now includes five major assembly plants, three operated by companies under the Tata Group and two by Foxconn. Around them sits a growing supply chain ecosystem of roughly 45 companies, many of them small and medium enterprises. Industry estimates suggest India now accounts for approximately 25% of global iPhone production, up from single digits just a few years ago. In the quarter ended September 2025, India overtook China to become the top smartphone exporter to the United States, with a 240% jump in smartphone manufacturing volumes.

These are real numbers, and they represent a genuine transformation of India’s industrial landscape. But zoom in on what is actually happening inside those five factories, and the picture becomes more complicated.

What “Assembly” Actually Means

To understand why assembly and manufacturing are such different things, it helps to look at what goes into an iPhone.

Apple’s supply chain is one of the most complex industrial systems ever built. A modern iPhone contains roughly 2,000 distinct components sourced from hundreds of suppliers across dozens of countries. There are chips fabbed at TSMC in Taiwan, display panels from Samsung and LG in South Korea, camera sensors from Sony in Japan, memory chips from Micron in the United States, rare earth magnets from China, and precision-machined aluminium frames processed in China before the final assembly even begins.

What happens in India’s five assembly plants is the last step in this global relay race: workers take finished components that arrive in shipping containers and put them together. They snap screens into frames, attach batteries, connect flex cables, run diagnostics, and package the finished product. This is skilled, demanding work, Foxconn’s plant near Bengaluru employs over 75,000 workers, roughly 80% of them women, each trained for six weeks before being deployed on the shopfloor. But it is not the same as manufacturing.

The components that go into an Indian-assembled iPhone are overwhelmingly made elsewhere. India exported electronics worth $38.56 billion in 2024–25, while importing electronic components worth $36.8 billion during the same period. The export figure looks impressive. The import figure reveals the dependency: India is spending almost as much importing the parts for its electronics industry as it earns exporting finished devices.

Despite India’s emergence as a major hub for electronics assembly, 70–80% of components, resistors, capacitors, connectors, and more, are still imported, mostly duty-free. The value India captures from each iPhone assembled here is a fraction of the device’s retail price. The components, the intellectual property embedded in them, and the high-margin manufacturing processes that create them remain largely in China, Taiwan, South Korea, and Japan.

Medium High-Tech vs. Super High-Tech

The electronics supply chain can be thought of in two broad tiers. The first tier, call it medium high-tech, covers the processes India has already mastered or is rapidly mastering: final assembly, testing, packaging, and some sub-component work. These processes require significant capital investment, trained workers, and precise quality control. India has demonstrated it can do this at scale.

The second tier, super high-tech, is where the real value is created. This is the domain of semiconductor wafer fabrication, display panel production, camera module manufacturing, printed circuit board production, and precision metalwork for structural components. These processes require decades of accumulated know-how, massive capital expenditure, specialised chemical processes, and supply chains of their own. China has spent thirty years building dominance in most of these categories, and it has done so with the full force of state subsidies, captive domestic demand, and an industrial ecosystem that is extraordinarily difficult to replicate quickly.

When an iPhone is “assembled in India,” the aluminium frame that gives it structure, the circuit board that connects its components, the camera module that lets it photograph your life, all of these, in most cases, arrived from China before assembly even began. China’s share of Apple’s component supply chain remains enormous even as final assembly shifts to India.

The PLI Scheme

India’s PLI scheme for smartphones was launched in 2020 as part of the broader “Make in India” campaign. It offered performance-linked cash incentives to companies that expanded their manufacturing in India and hit specific production and export targets. The results on assembly were swift and dramatic. Foxconn received ₹2,807 crore and Tata received ₹2,068 crore in PLI incentives between FY23 and FY25.

The PLI scheme succeeded brilliantly at its primary goal: getting global electronics companies to build assembly capacity in India. What it did not, and arguably could not, fix in the short term was the component gap. PLI incentives were tied to production and export volumes, which naturally pushed companies toward the fastest, cheapest path to scale: assembly. Building component manufacturing from scratch is slower, riskier, and requires a different kind of investment horizon than assembling finished products. The PLI structure, effective as it was at accelerating assembly, did not create strong enough incentives for the harder work further up the value chain.

This is not a criticism of the scheme, it achieved what it was designed to achieve. But it left a structural gap that the government eventually recognised and addressed through a new initiative.

Hindalco and the iPhone Frame

The first signs of India moving beyond assembly into genuine component manufacturing have begun to appear, and one of the most significant involves something as elemental as metal.

The aluminium frame of an iPhone is not a simple product. It starts as raw aluminium, which is melted, alloyed to precise specifications, and extruded into complex profiles. Those profiles are then precision-machined with tolerances measured in microns, anodised for durability and finish, and shipped to assembly lines. The entire “melt and mold” process, taking raw material and producing a finished structural component, has been dominated by Chinese suppliers who benefit from cheap energy, mature processing know-how, and deep integration with Apple’s supply chain.

Hindalco Industries is now investing ₹586 crore in Kuppam, Andhra Pradesh, to build an aluminium extrusion facility that will supply chassis for Apple’s iPhones. The location is strategic: Kuppam is just 120 kilometres from Bengaluru’s Devanahalli, where Foxconn recently started operating its second-biggest facility outside China. The proximity matters for logistics, quality control, and the kind of tight feedback loops that high-tolerance component manufacturing requires.

Production at the Hindalco facility is targeted to begin by March 2027, and it is expected to create over 600 jobs. With the new unit, Hindalco’s extrusion capacity would more than double, from 60,000 to 1,09,000 tonnes.

This is the “melt and mold” moment, India going beyond putting things together to actually making the pieces. It is early, it is modest relative to the scale of the overall supply chain, and it is one facility in one product category. But the direction of travel is significant. If China’s subsidy-driven dominance of component manufacturing was built over three decades, India’s displacement of that dominance will also take time, and it has to start somewhere.

The Electronics Component Manufacturing Scheme

The government’s response to the component gap is the Electronics Component Manufacturing Scheme (ECMS), notified by the Ministry of Electronics and Information Technology in April 2025. The scheme carries a total financial outlay of ₹22,919 crore and will run for six years. The Union Budget 2026–27 subsequently increased that outlay to ₹40,000 crore, a signal that the government is treating this as a priority, not an afterthought.

The ECMS has received 249 applications from local and global companies committing proposed investments of ₹1.15 lakh crore, the highest-ever investment commitment in India’s electronics sector.

The first batch of seven projects was approved in October 2025, representing a combined investment of ₹5,532 crore. The components being targeted tell their own story about where India’s supply chain gaps are most acute. Multi-layer printed circuit boards and HDI PCBs, the core circuit boards that connect and control every electronic device, used in smartphones, laptops, automotive and industrial systems, will now be manufactured in India for the first time at scale. Camera module sub-assemblies, which go into every smartphone, drone, and medical device, are also included.

Perhaps most symbolically, India will establish its first Copper Clad Laminate manufacturing facility under the ECMS. CCL is the base component for manufacturing multi-layer PCBs, and right now, it is entirely imported. Polypropylene films, used in capacitors across consumer electronics and automotive systems, are also being targeted.

The ECMS offers combined central and state incentives exceeding 100% of the investment through a mix of subsidies and tax credits. It addresses the high capital requirements and competitive disadvantages that have made component manufacturing challenging in India. Some states like Tamil Nadu are offering matching grants on top of the central scheme’s incentives, a sign that state governments have recognised the economic prize at stake.

The scheme is specifically designed to address what the government diagnosed as the critical bottleneck: India’s domestic value addition in electronics currently stands at just 15–18%. Most of what India earns from its electronics industry is labour and logistics, the least defensible parts of the value chain, most easily undercut by competitors with cheaper wages. The ECMS is an attempt to push that number up by building the component base that assembly depends on.

The China Problem

The challenge India faces in building a component manufacturing base is not primarily technological, it is economic. Nearly 40% of India’s electronic component imports come from China, with Hong Kong accounting for over 16% more. Chinese component manufacturers have benefited from decades of state support: subsidised land and power, captive domestic demand from the world’s largest electronics market, and a skills base built across generations of workers.

Breaking that monopoly requires not just matching China’s capabilities but competing with its cost structure, which is shaped by subsidies that are hard to replicate. India’s approach, through the ECMS and complementary schemes, is to use its own subsidy regime to compress the cost disadvantage enough to make domestic component manufacturing economically viable for global suppliers.

Manufacturing costs in India are estimated to be 5 to 8% higher than in China, potentially rising to around 10%, but Apple is believed to be willing to absorb the additional cost in order to reduce supply-chain risk and limit exposure to geopolitical uncertainty. This is the geopolitical tailwind that India’s electronics strategy is riding: global companies are no longer optimising purely for cost. They are optimising for resilience, and that changes the calculus for where they build.

Apple’s own behaviour illustrates the shift. By 2026, Apple plans to manufacture in India the majority of iPhones it sells in the US market. That is not just a supply chain decision, it is a geopolitical hedge against a potential confrontation over Taiwan and the trade tensions that have made single-country dependence risky for any global company.

Apple’s Clean Energy Program & A Supply Chain Within the Supply Chain

There is a further dimension to Apple’s India strategy that rarely gets discussed in coverage of manufacturing milestones: the clean energy requirement.

Apple has committed that its entire direct manufacturing supply chain must use 100% renewable electricity for all Apple production before 2030. The company’s operational renewable energy capacity in its supply chain grew to 20.7 GW in 2025, up from 10.3 GW in 2021. This is not a marketing exercise, Apple tracks and verifies supplier energy data, and compliance with its Supplier Code of Conduct is a condition of maintaining the relationship.

For India, this creates a clean energy imperative that runs parallel to the manufacturing scale-up. Apple has entered a joint venture with renewable developer CleanMax to invest in a portfolio of six rooftop solar projects totalling 14.4 megawatts, powering Apple’s corporate operations, offices, and retail stores in India. Beyond its own operations, Apple is helping suppliers in India implement rooftop solar systems and connect to renewable energy sources.

Apple has set up an Education Hub in Bengaluru offering development courses to more than 25 of its suppliers, including Tata Electronics, covering Swift coding, robotics, automation technology, and smart manufacturing, part of its $50 million global Supplier Employee Development Fund.

These investments signal something important: Apple is not treating India as a temporary manufacturing alternative to China. It is embedding itself into India’s industrial and energy infrastructure in ways that would be costly to unwind. That creates durable incentives for both sides, Apple needs India to succeed, and India needs Apple to deepen its commitment.

What “Assembled in India” Will Mean in 2030

The label “Assembled in India” is not wrong, it accurately describes the current state of iPhone manufacturing in India. But the ambition that the government and the private sector are now pursuing goes considerably further: to make India a country where the components that go into that assembly are also made domestically.

India’s electronics production has grown from ₹1.9 lakh crore in 2014–15 to ₹11.3 lakh crore in 2024–25, a six-fold increase. Electronics have become India’s third-largest and fastest-growing export category. The foundation is real and it is solid.

The next phase is harder. Moving from assembly to component manufacturing requires different capital, different skills, different timelines, and a different tolerance for risk. It means competing with Chinese suppliers who have three decades of advantages in processes that India is just beginning to develop. It means building the CCL plants, the PCB fabs, the camera module lines, and the precision machining facilities that currently sit almost entirely in East Asia.

The ECMS, the Hindalco aluminium facility, Foxconn’s mega-campus in Devanahalli, Tata’s expanding factories in Hosur, these are the early chapters of that story, not the conclusion. The $50 billion iPhone export milestone is a genuine achievement and a testament to what determined industrial policy can accomplish.

But the deeper prize, the one that would give India true leverage in the global electronics supply chain, is manufacturing the iPhone, not just assembling it. That work is just beginning.