Apple's India Manufacturing Strategy and Its Resilience Amid U.S.-China Rapprochement

In the evolving landscape of global supply chains, Apple Inc. (AAPL) has positioned India as a cornerstone of its manufacturing strategy, leveraging the country's Production-Linked Incentive (PLI) scheme and geopolitical diversification. As U.S.-China trade tensions persist and rapprochement efforts emerge, the sustainability of India's competitive edge in iPhone production becomes a critical focal point for investors and policymakers alike.

The PLI Scheme: A Catalyst for Growth

India's PLI scheme, launched in 2020, has been instrumental in transforming the country into a manufacturing hub for Apple. By offering financial incentives tied to incremental sales, the scheme has attracted significant investments from Apple's partners, including Foxconn and Tata Electronics. As of 2025, , , , according to a Business Standard report. This growth is underpinned by the PLI scheme's final year, which incentivizes companies to maximize output before the program's expiration.

The PLI scheme's success extends beyond Apple. By July 2025, India had approved 806 projects across 14 sectors, , according to a India Briefing report. The electronics sector, in particular, , according to the same report. These metrics underscore the scheme's role in reducing import dependency and fostering a competitive manufacturing ecosystem.

Geopolitical Diversification and U.S.-China Dynamics

Apple's shift to India is driven by a strategic pivot away from China, where U.S. tariffs on Chinese goods have made production costly. By 2026, . market from India, , according to a Guardian report. This move aligns with the broader "China + 1" strategy, where companies diversify supply chains to mitigate geopolitical risks.

However, the introduces new variables. For instance, the U.S. halving of fentanyl tariffs on Chinese imports could reduce the cost differential between Chinese and Indian production. , Apple may reassess its reliance on India if tariffs continue to decline, according to a Business Standard report. Analysts caution that while India's PLI scheme and labor advantages remain attractive, the sustainability of this model depends on continued government support and policy consistency, according to an HFS Research report.

India's Competitive Edge: Infrastructure and Labor Reforms

Post-2026, India has introduced infrastructure and to sustain its manufacturing competitiveness. , including a semiconductor joint venture with HCL, and Tata Electronics' acquisition of iPhone manufacturing units from Wistron and Pegatron, highlight the country's growing role in Apple's supply chain, according to the HFS Research report. Additionally, , with targeted reforms in 27 sectors, according to an Invest India report.

Despite these strides, challenges persist. Bureaucratic hurdles, infrastructure gaps, and labor laws requiring modernization could hinder long-term growth. Competitors like Vietnam and Indonesia are also offering aggressive incentives, narrowing India's window to solidify its position, according to the HFS Research report.

Risks and Future Outlook

The sustainability of India's competitive edge hinges on three factors:
1. PLI Scheme Extension: The Indian government has announced plans to extend the PLI scheme until 2030, providing a critical tailwind for Apple's manufacturing ambitions, according to the Guardian report.
2. Geopolitical Stability: While U.S.-China rapprochement may reduce tariff pressures, India's role as a diversification hub remains vital for Apple's risk mitigation strategy, according to the Business Standard report.
3. Structural Reforms: Addressing infrastructure bottlenecks and labor market inefficiencies will be essential to maintain cost competitiveness against rivals, according to the HFS Research report.

For investors, India's manufacturing ecosystem presents both opportunities and risks. The PLI scheme's extension and Apple's strategic pivot offer long-term growth potential, but geopolitical shifts and domestic challenges could disrupt this trajectory.

Conclusion

Apple's India manufacturing strategy is a testament to the country's growing influence in global supply chains. While the PLI scheme and labor reforms have catalyzed growth, the sustainability of India's competitive edge will depend on continued policy support, infrastructure development, and adaptability to shifting geopolitical dynamics. For now, India remains a pivotal player in Apple's quest for supply chain resilience, but investors must remain vigilant to evolving risks.