Apple's India Bite and Make in India's Growing Momentum
Kotak Insights | Date 25/05/2024
Apple Inc.’s growth in the Indian market is becoming interesting.
Apple's production output in India doubled in FY24 from the previous year, reaching a striking $14 billion worth of iPhones manufactured on Indian soil.
This milestone underscores Apple's deepening commitment to India and highlights a significant achievement for the nation.
That’s not all. The largest carmaker in the US, Tesla, is also looking to source critical components from India and expand its business in the country.
We could see the shift from China to India happening.
So, what’s driving this growth?
Is Apple planning to expand its manufacturing in India? How is all of this influencing the Indian manufacturing sector?
Let’s break it down…
Unveiling the Apple of India's Eye: Data-driven Insights
Let's peel back the layers and see the data behind the growth:
- Production Boom: Apple's India production skyrocketed from $7 billion in FY23 to a staggering $14 billion in FY24, a remarkable 100% increase.
This signifies a major shift in the company’s global manufacturing strategy, potentially leading to a more geographically balanced production base.
- Market Share Taking a Bite: According to Bloomberg, roughly, 14% of all iPhones produced globally now come from India—that’s one in seven iPhones manufactured!
This is a significant step towards diversification for Apple's manufacturing footprint.
This surge in Apple's India output also has a ripple effect that extends far beyond factory floors.
You see, India is rapidly evolving into a major electronics and technology manufacturing hub.
Apple's expansion serves as a catalyst, and it could attract investments from other global players, creating a domino effect across the Indian tech ecosystem.
Skilling Up and Job Creation:
Building a Skilled Workforce: The influx of tech manufacturing necessitates a skilled workforce.
This will lead to increased focus on technical education and training programs.
A report by McKinsey & Company estimates that the Indian electronics industry has the potential to create up to 9 million jobs by 2030.
This could empower the Indian workforce and create high-value employment opportunities.
Moreover, a study by Assocham-EY predicts that India's electronics manufacturing sector's growth could generate over 1 million additional jobs by 2025.
This could be a significant boost for the Indian economy.
Building a Manufacturing Ecosystem
The presence of a leading tech giant like Apple incentivises the development of a robust and technologically advanced manufacturing ecosystem in India.
This includes fostering a network of local suppliers and ancillary industries, promoting domestic production capabilities, and attracting foreign direct investment (FDI).
Benefits Beyond Apple
This growth in India's tech manufacturing prowess is poised to benefit Apple and other stakeholders in the Indian tech landscape.
Startups and Tech Companies: A robust manufacturing ecosystem creates a fertile ground for local startups and tech companies to flourish.
Easier access to manufacturing facilities, a skilled workforce, and a supportive regulatory environment can accelerate their growth and innovation.
Global Tech Manufacturing Arena: India can potentially become a major player in the global tech manufacturing arena.
This strengthens India's position in the global supply chain and fosters a more competitive and geographically diversified manufacturing landscape, reducing dependence on any single region.
What’s Ahead?
India's manufacturing sector is poised for a significant transformation driven by continued foreign investment and technological advancements:
Policy Tailwinds: The Indian government's "Make in India" initiative, which focuses on attracting foreign investment and promoting domestic manufacturing, is expected to receive further impetus.
Streamlined policies, regulations, and tax incentives can further incentivise tech giants like Apple to expand their operations and production capacity in India.
Innovation Hub: A growing emphasis on research and development (R&D) can push India towards becoming a hub for innovation in the tech manufacturing sector.
This will attract cutting-edge technology and empower local companies to contribute their innovations to the global tech landscape.
Conclusion
Overall, Apple's production surge in India marks a significant turning point for the country’s manufacturing sector.
With continued advancements and the right policy framework, India has the potential to become a global leader in tech manufacturing.
This could further translate to economic growth, skilled jobs, and innovation, making it a win for Apple and India's aspirations to become a powerhouse in global tech manufacturing.
India is taking a larger bite out of the global tech manufacturing pie!
We will see you next week with another exciting story!
Happy Learning!
Sources and References:
Disclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read the full disclaimer here.
