Any country in the world would be happy to welcome the American giant Apple, which would like to manufacture its high-end products there. For India, where the new generation of iPhone will be manufactured, this may be the good news of the year.
Posted at 7:00 a.m.
In fact, Foxconn, an Apple contractor, has already been manufacturing iPhones in India since 2017. But the decision to produce the newest model (the iPhone 14) in India rather than China is a first for the company. American company. It is also a sign that supply chains are adapting to the new global context.
In the country of Narendra Modi, significant changes have been observed for several years. The Indian Prime Minister, in office since 2014, is trying hard to modernize the Indian economy. It can be said that he started at the beginning by pledging to build more than 100 million toilets and fulfilling this commitment, for which he received an award from the Bill and Melinda Gates Foundation.
Surely there is still a lot to do, but slowly the big liner of 1.4 billion inhabitants is changing course.
Apple’s recent decision to transfer part of its production from China to India can be seen as a victory for the Indian government, which in 2020 launched a program to attract investment in the manufacturing sector. The program offers all sorts of tax breaks and the ability to acquire land for businesses of all stripes, from cars to drones and textiles to medicines.
This is how India entered the race for investment in semiconductors, in competition with the United States and Europe, which want to repatriate the production of this essential component for today’s world. . Interested parties have already started to show up.1
The success of the Indian government’s strategy remains to be proven, but the country seems to be on the right trajectory. According to the International Monetary Fund, India should experience the strongest economic growth in the world this year, around 7%, and repeat the feat next year.
Measured in terms of gross domestic product, India’s economy has just surpassed that of Britain, its former colonial master. India is now the world’s fifth largest economy and is expected to continue climbing the rankings.
India is taking advantage of the current geopolitical tensions. The country did not condemn Russia’s invasion of Ukraine and is currently buying Russian oil at a good price. As India imports 80% of the energy it needs, any savings are good to take.
Also, countries that have realized a little late that they are too dependent on China are trying to diversify their trade relations, which benefits India. For Apple and its supplier Foxconn, a Taiwanese company whose government is at loggerheads with China, moving some iPhone production from China to India certainly makes sense.
But those who hoped that industrial production would return to the industrialized countries that had outsourced it to Asia should lower their expectations.
Apple is moving its iPhone production to another country where labor is abundant and cheap. After India, the company is also eyeing Vietnam to manufacture more and more other products there, such as its iPads and Apple Watches.2
It is not tomorrow the day before that the great manufacturers of this world will voluntarily renounce for patriotic reasons the irresistible attractions of emerging economies. As long as there are.