Even if the United States were to impose a 25 per cent tariff on iPhones manufactured in India, the total production cost would still be much lower if compared with manufacturing the devices in the U.S, according to a report by Global Trade Research Initiative (GTRI).
This comes amid a statement by U.S. President Donald Trump, threatening to impose 25 per cent tariffs on iPhones if Apple decides to make it in India. However, the GTRI report showed that manufacturing in India remains cost-effective, despite such duties.
The report breaks down the current value chain of a $1,000 (roughly Rs. 83,400) iPhone, which involves contributions from over a dozen countries. Apple retains the largest share of the value, about $450 (roughly Rs. 37,530) per device, through its brand, software, and design.
It also added that the U.S. component makers, such as Qualcomm and Broadcom, add $80 (roughly Rs. 6,672), while Taiwan contributes $150 (roughly Rs. 12,510) through chip manufacturing. South Korea adds $90 (roughly Rs. 7,506) via OLED screens and memory chips, and Japan supplies components worth $85 (roughly Rs. 7,089), mainly through camera systems. Germany, Vietnam, and Malaysia account for another $45 (roughly Rs. 3,753) through smaller parts.
GTRI stated that China and India, despite being major players of iPhone assembly, earn only around $30 (roughly Rs. 2,502) per device. This is less than 3 per cent of the total retail price of an iPhone.
The report argues that manufacturing iPhones in India is still economically viable even if a 25 per cent tariff is applied.
This is mainly because of the sharp difference in labour costs between India and the U.S. In India, assembly workers earn approximately $230 (roughly Rs. 19,182) per month, while in the U.S. states like California, labour costs could soar to around $2,900 (roughly Rs. 2,41,860) per month due to minimum wage laws, a 13-fold increase.
As a result, assembling an iPhone in India costs about $30 (roughly Rs. 2,502), while the same process in the U.S. would cost around $390 (roughly Rs. 32,526). In addition to this Apple gets the benefit of production-linked incentive (PLI) on iPhone manufacturing in India from government.
If Apple were to shift production to the U.S., its profit per iPhone could fall drastically from $450 (roughly Rs. 37,530) to just $60 (roughly Rs. 5,004), unless retail prices are significantly increased.
The GTRI report highlighted how global value chains and labour cost differences make India a competitive option for manufacturing, even in the face of potential U.S. trade restrictions.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Read the original article here