GTRI: US should impose 25% tariff on iPhones manufactured in India
New Delhi: The Global Trade Research Initiative (GTRI) found that even if the US imposed a 25% tax on iPhones made in India, the overall cost of production would still be much cheaper than if the devices were made in the US.
In the midst of this, U.S. President Donald Trump threatened to levy 25% tariffs on iPhones should Apple choose to manufacture them in India. Nevertheless, the GTRI analysis demonstrated that, in spite of these taxes, manufacturing in India is still economical.
The current value chain of a $1,000 iPhone, which includes contributions from more than a dozen nations, is broken out in the paper. Because of its design, software, and brand, Apple keeps the biggest portion of the value, about USD 450 per device.
Additionally, it said that Taiwan provides USD 150 via chip production, while U.S. component manufacturers like Qualcomm and Broadcom contribute USD 80. Japan provides components valued at USD 85, mostly in the form of camera systems, while South Korea contributes USD 90 in the form of OLED panels and memory chips. Malaysia, Vietnam, and Germany contribute an additional USD 45 in lesser amounts.
Despite being important participants in the iPhone assembly industry, China and India only make around USD 30 per handset, according to GTRI. This is less than 3% of the iPhone’s whole retail cost.
The research makes the case that even with a 25% tax, it is still profitable to manufacture iPhones in India.
The primary reason for this is the stark disparity in labor prices between India and the United States. Assembly workers in India make around USD 230 a month, while minimum wage regulations in US areas like California may drive labor expenses up to USD 2,900 a month, a 13-fold increase.
Consequently, the cost of constructing an iPhone in India is around USD 30, while the identical procedure in the US would cost approximately USD 390. Additionally, Apple benefits from the government’s production-linked incentive (PLI) for iPhone manufacture in India.
Unless retail prices are raised considerably, Apple’s profit per iPhone might drop sharply from USD 450 to about USD 60 if manufacturing is moved to the United States.
The GTRI analysis emphasized how, despite possible trade restrictions from the United States, India remains a viable choice for manufacturing due to global value chains and labor cost discrepancies.