Apple to save upto $50 million per year due to BCD reduction; to invest in India expansion

Navkender Singh, associate vice president at market tracker IDC, said that while Apple will save money, it will not necessarily pass it on to consumers; rather, it will invest this in expansion in the country.

"The reduction in BCD can rationalise the prices, especially in the mass segments like below 25,000, and increase domestic phone consumption. Moreover, this is a welcome step to boost the expansion of device manufacturing capacity in India," he added.

Pankaj Mohindroo, ICEA chairman, told Moneycontrol the move would also lower the prices of imported smartphones by 5-6 per cent.

Apple assembled 14% of global iPhones in India in FY24, and the country's ranking in global electronics exports improved by four positions, the Economic Survey 2023-24 said on July 22.

The Survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, said that the mobile phone segment within the electronics sector has experienced the maximum growth with exports to the U.S. rising from $2.2 billion in the financial year 2022-23 to $5.7 billion in FY24.

Apple has been aggressively increasing local production of its flagship iPhone devices in India through Foxconn and Tata Electronics. Tata, which acquired Wistron operations, is acquiring Pegatron’s India operations, including an iPhone manufacturing plant near Chennai and another under-construction unit.

Apple aims to expand its production base in the country, targeting to manufacture a quarter of all its iPhones in India over the next 3–4 years, up from 14 percent of their total iPhone production. This effort includes building a network of local vendors to reduce dependence on Chinese suppliers, Moneyconyrol previously reported.

JP Morgan analysts had estimated in 2022 that, a quarter of all Apple products would be made outside China by 2025, from 5 percent at that time. As of end-FY24, about $14 billion worth of iPhones were made in India, making up 14 percent of the global total.

Apple reportedly racked up exports valued at over $2 billion in the first two months of the current financial year (FY25), accounting for 81 percent of the country’s total production of iPhones worth $2.6 billion.

The company shipped over 10 million iPhones in 2023 in India, securing the top revenue position for the year, pipping its Korean rival Samsung, according to a report from Counterpoint Research. In 2022, it shipped over 6 million iPhones.

Apple accounted for 23 percent of the smartphone revenue share in 2023, surpassing Samsung's 21 percent market share. In the previous year (2022), Samsung held the top spot with a 22 percent smartphone revenue share, while Apple had 17 percent, data accessed by Moneycontrol showed.

Moneycontrol reported on July 8 that Apple may resume preparations for manufacturing its iPads in India, encouraged by the government's push to attract more supply chains.

Apple may soon start looking for a manufacturing partner after its previous attempt to partner with China’s BYD to make iPads in India hit a roadblock due to government restrictions led by geopolitical concerns.

In addition to ramping up iPhone manufacturing, the government wants Apple to consider making laptops and desktops in India in the coming years.

The official said Apple has shared “big plans” for India for the next 2-3 years with the government. “They want to build an alternate supply chain in India, and with that, more partners will come to India while existing ones will further deepen their capabilities.”