How Trump's Tariffs Are Crushing Apple's 'Make In India' Dream

India's quest to become a major iPhone manufacturing hub has encountered a significant obstacle. The US has imposed "reciprocal tariffs" on over 180 countries, including India, which has been slapped with a 26% tariff. Although this rate is lower than China's 54% and Vietnam's 46%, Indian officials are still concerned about the impact on the country's electronics manufacturing sector.

The US is India's largest trading partner, accounting for 18% of total goods exports. The 26% tariff could severely affect electronics shipments, profitability, and supply chains. Per a Doordarshan news report, Ashok Chandak, President of the Indian Electronics and Semiconductor Association (IESA), stated that the tariff regime poses a significant challenge to India's exports. 

“The 26 per cent tariffs imposed by the US present a significant challenge to India's exports... While India is better positioned than many other economies, these tariffs can potentially impact domestic industries, disrupt trade flows, and squeeze profit margins", he said.

Apple, which has relocated 15% of its iPhone production to India, is likely to be affected by the tariffs. The company faces a 54% duty on Chinese imports, which could lead to a significant increase in prices. Analysts estimate that the iPhone 16 Pro Max could cost nearly $2,300 or ₹1.9 lakh in Indian terms if Apple passes on the added costs to consumers.

Although Apple has not commented on the developments related to Trump's tariffs, its stock plunged more than 8% after the announcement - its worst single day drop since 2020.

Despite the challenges, India remains an attractive destination for multinational companies looking to diversify their manufacturing operations. Apple has been increasing its footprint in India, and the government is hoping to leverage this moment to fast-track a bilateral trade agreement with the US.

"Support from corporations such as Apple, Microsoft and Google may be sought... to reinforce India's pitch during BTA negotiations with the Trump administration," a senior industry official told The Times of India.

India's smartphone export drive, led by Apple's contract manufacturers, has been gaining momentum. Between April and January, India exported nearly ₹1 lakh crore worth of iPhones, up from ₹60,000 crore in the same period last year. However, the new tariffs threaten to undercut these gains, and India's production for Apple remains at risk.

"There's a real chance companies could begin shifting new manufacturing to countries with lower tariff exposure," a senior industry official told TOI.

While India may benefit from being "less hit" than others in the short term, the long-term implications of the tariffs remain uncertain.