India Achieves Record Smartphone Exports, Apple's Success Story and Production-Linked Incentives

Highlights

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• India surpasses its own target and achieves over $11 billion in smartphone exports in FY23, marking a 100% YoY growth.
• Apple's suppliers, including Foxconn, Wistron, and Pegatron, cumulatively exported over $5 billion of iPhones in FY23.
• Apple alone accounted for almost half of the total exports, followed by Samsung with about $4 billion.
• Apple's strong performance in India can be attributed to its strategy to diversify its supply chain network beyond China and the production-linked incentive (PLI) scheme of the Indian government.
• The PLI scheme offers financial incentives to smartphone makers based on their incremental production and exports from India.
• India's achievement in smartphone exports is a sign of its growing ambition to become a global hub for smartphone manufacturing.

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India has achieved a remarkable feat in smartphone exports, surpassing its own target and reaching over $11 billion in the fiscal year that ended in March 2023. This is a 100% growth from the previous year, and a sign of India's growing ambition to become a global hub for smartphone manufacturing.

The record smartphone exports were driven by Apple's suppliers, which cumulatively exported over $5 billion (roughly Rs 40,000 crore) of iPhones in FY23. Apple alone accounted for almost half of the total exports, with an estimated $5 billion to $5.5 billion, according to industry analysts. Samsung Electronics, the South Korean giant, ranked second with about $4 billion.

Apple's strong performance in India can be attributed to its strategy to diversify its supply chain network beyond China, where it faced risks due to COVID restrictions and other factors. Apple has brought in its top manufacturers - Foxconn, Wistron and Pegatron - to invest and expand in India, with the support of the production-linked incentive (PLI) scheme of the Indian government. The PLI scheme offers financial incentives to smartphone makers based on their incremental production and exports from India.

Apple is also set to further boost its presence in India, the world's second largest smartphone market, by opening its first two retail stores in the country next week. According to analysts at JP Morgan, Apple is aiming to produce 25% of all iPhones by 2025 in India. While Apple has performed admirably in the smartphone industry, it has faced a setback in the PC market as its Q1 2023 shipments decreased by 40%, signifying a difficult start to the year.

Samsung, which was the leader in smartphone exports from India until last year, also benefited from the PLI scheme and increased its shipments from India. Samsung has a large manufacturing facility in Noida, Uttar Pradesh, where it produces a range of smartphones for both domestic and international markets.

The notable absence from the smartphone export basket was the Chinese phone makers, such as Xiaomi, Oppo, Vivo, Realme and OnePlus, which dominate the Indian smartphone market with a near 75% share in volumes. The Chinese companies have not been able to increase their exports from India significantly, as most of their overseas commitments are currently being met out of their factories located in China.

The Indian government has been pushing the Chinese companies to ramp up their exports from India, as part of its Make in India program that aims to boost local manufacturing and create jobs. The government has also imposed higher duties on imported smartphones and components to encourage domestic production.

The surge in smartphone exports from India is a major win for Prime Minister Narendra Modi's Make in India program, which seeks to make India a leader in the mobile device market of the world and play a major role in India's electronic exports. The program also aims to reduce India's dependence on imports and improve its trade balance.

India's smartphone exports have more than doubled, reaching over $11 billion in the fiscal year that ended in March 2023. This is a sign of India's growing ambition to become a global hub for smartphone manufacturing. Apple and Samsung led the charge, boosted by the PLI scheme of the Indian government. The Chinese phone makers were almost absent from the export basket, as they continue to rely on their factories in China.