Apple’s India shift a ‘multi-decade play’; industrial clusters key to matching China: Patrick McGee

Patrick McGee

• India's Apple supply chain ambitions may take decades to realize
• Building a full manufacturing ecosystem is key, not just exports
• India must reduce import dependence for real supply chain gains

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India’s ambition to position itself as a credible alternative to China in Apple’s global supply chain will take decades and must move beyond headline export numbers to building a deep manufacturing ecosystem, according to Patrick McGee, author of Apple’s China Playbook.

“It’s tough for anybody to compete with China,” McGee said, pointing to the scale of Chinese manufacturing. “They installed more industrial robots than the rest of the world combined last year.” While India has advantages of scale and demographics, he cautioned that replicating China’s ecosystem would be a long-term effort. “I would emphasise that this is a multi-decade play.”

He was speaking at Rising Bharat event organised by Network18 at Bharat Mandapam on February 27-28.

Export numbers versus ecosystem depth

McGee cautioned against reading too much into the value of iPhones exported from India. “People will talk about iPhone production, and they’ll give the value of the iPhones that have been exported. But don't forget that the value of the export of the iPhone is largely based on imported components, mostly from China, also from Taiwan and Korea,” he said.

He referred to analysis by former Reserve Bank of India Governor Raghuram Rajan, noting that while electronics exports appear to have surged, net imports of components have also risen sharply. The implication, he suggested, is that India remains heavily dependent on imported parts, limiting domestic value addition.

“You don’t just need Apple, you need all their suppliers and their tier two suppliers and tier three suppliers,” McGee said, underlining the importance of creating a full ecosystem rather than relying on final assembly.

‘Next-door manufacturing’ model

Drawing on China’s experience, McGee described what he called “next-door manufacturing”, where final assembly units operate alongside plastic moulding, metal stamping, tool-making and other specialised suppliers within tightly integrated industrial clusters.

“You have the formation of these industrial clusters, where just everything was there,” he said, explaining that much of China’s supply chain was custom-built for Apple.

India, he said, would need similar integrated zones with coordination between central and state governments. “It’s not just a matter of one company setting up shop. It’s there having to be like an entire zone… a scientific park where there might be tax exemptions,” he said, adding that local governments would play a decisive role in implementing such models.

He also emphasised the importance of Taiwanese manufacturers in any such transition. “There’s no chance that Apple would have been successful in China without the Taiwanese establishing all the factories for them,” he said.

China+1 opportunity

McGee acknowledged that global companies are increasingly pursuing “China plus one” strategies to diversify supply chains. In that context, India is not directly competing with China, he said, but with other alternatives such as Vietnam.

“India has great potential. So the question is, can it realise that potential,” he said.

McGee said that while India’s scale, younger workforce and policy push provide a historic opening, the real test lies in building a dense, locally anchored supply chain that reduces import dependence. Without that, headline export figures alone may not signal a fundamental shift in Apple’s global manufacturing geography.