India’s Strategic Shift: New Incentives Propel Apple’s iPhone Production and Export Growth
India is poised to introduce a new set of financial incentives aimed at bolstering its position as a global manufacturing hub, particularly in the smartphone sector. This initiative comes as the country’s successful Production-Linked Incentive (PLI) program approaches its conclusion in March 2026. The forthcoming framework is designed to attract major technology companies, including Apple and Samsung, by linking financial rewards directly to export volumes and the utilization of locally sourced components.
Transitioning from Domestic Assembly to Global Export Hub
The original PLI program, a substantial $21 billion endeavor, effectively transformed India into a significant smartphone assembly center. Currently, nearly all smartphones sold within the country are manufactured domestically. With this milestone achieved, Indian policymakers are now focusing on elevating the nation’s role from a domestic assembly point to a global distribution center. By tying subsidies to international shipments, the new policy aims to encourage brands to produce devices in India specifically for export markets.
Apple’s Expanding Manufacturing Footprint in India
This strategic policy shift aligns seamlessly with Apple’s ongoing expansion in India. In 2025, Apple assembled approximately 55 million iPhones in the country, marking a 53% increase from the previous year and accounting for about 25% of its global iPhone production. ([manufacturing.economictimes.indiatimes.com](https://manufacturing.economictimes.indiatimes.com/news/hi-tech/apple-boosts-iphone-production-in-india-by-53-in-2025-report/129394241?utm_source=openai)) Reports suggest that Apple plans to manufacture the majority of its U.S.-bound iPhones in India by the end of 2026. This move is largely driven by the desire to mitigate heavy tariffs and reduce dependence on Chinese manufacturing facilities.
Implications for the Broader Supply Chain
India’s new incentive structure signifies a concerted effort to ascend the manufacturing value chain. The proposed incentives are expected to employ a tiered system, offering greater rewards to companies that source complex components, such as camera modules and display assemblies, from local Indian suppliers. While final assembly operations have seen significant growth, developing a comprehensive and reliable supply chain remains a work in progress. India continues to import many high-value components from countries like Taiwan and South Korea. However, the revised incentive framework underscores the government’s commitment to expanding the domestic electronics sector, with a target of reaching $500 billion annually by 2030.
The Role of Production-Linked Incentive (PLI) Schemes
The PLI schemes have been instrumental in attracting global players to establish manufacturing units in India. These schemes provide performance-linked incentives based on incremental sales from products manufactured in domestic units. The objective is to boost the manufacturing sector and reduce imports by encouraging both foreign and domestic companies to expand their production and export capacities. As of early 2025, the PLI scheme for large-scale electronics manufacturing had attracted investments of ₹4,784 crore, leading to total production of ₹2,03,952 crore, including exports of ₹80,769 crore. The scheme has also generated employment for over 40,000 individuals. ([timesofindia.indiatimes.com](https://timesofindia.indiatimes.com/gadgets-news/iphone-maker-foxconns-india-unit-gets-rs-357-crore-incentive-boost/articleshow/96442082.cms?utm_source=openai))
Challenges and Opportunities in Local Component Sourcing
Despite the progress, challenges remain in achieving higher levels of local value addition. Under the PLI scheme, the government aimed for a 21% value addition in mobile devices by fiscal 2024, with targets increasing to 35-40% by fiscal 2026. However, Apple suppliers have achieved only 12-15% in value addition. ([digitimes.com](https://www.digitimes.com/news/a20240702VL203/apple-india-government-policy-mobile-phone-production.html?utm_source=openai)) To address this, the government is encouraging companies to source more components locally, which would not only reduce import dependency but also strengthen the domestic supply chain.
Future Outlook
If the new subsidies function as intended, they will firmly position India at the center of the global consumer electronics trade. The government’s proactive approach in revising incentive structures and focusing on export-oriented manufacturing is expected to attract more multinational corporations to set up production facilities in India. This, in turn, will contribute to economic growth, job creation, and the development of a robust manufacturing ecosystem.
