Is India going to be the main supplier of Apple products? The American tech company announced the details of the latest iPhone in September, noting that some of the phones will be produced in India this year. It is the first time that India will start production within the year of launch. Although Apple has been doing business in India since 2017, it previously only had older models made there. Analysts see the rapid start of production of the iPhone 14 as a sign: the South Asian country is increasingly able to claim its place in global production. Investment bank JP Morgan estimates that 5 percent of global iPhone14 production will have moved to India by the end of the year. In a report published last month, analysts even write that by 2025 a quarter of all iPhone production will take place there. Apple itself doesn’t release production figures, but global suppliers include manufacturers Wistron, Foxconn and Luxshare, who have made investments in India in recent years. News site Nikkei Asia wrote in early October that Apple has also placed an order for the production of headphones (Beats) and earplugs (AirPods) in India. And according to tech sites, Google would also be planning to move some of its smartphone production to that country. The magnitude of the shift is still difficult to predict, but it is clear that Apple, like other multinationals, is looking for alternatives to China. The severe impact of the corona pandemic there, and the ‘zero-tolerance’ policy for new infections, are hampering Chinese production. Also from a geopolitical perspective, too close entanglement is currently risky. Now that ‘Made in China’ is considered a risk, international companies are looking for replacements in the region. Also read: How China is losing its status as a production shed Interesting sales market India certainly has that ambition, as the news of the latest iPhone has shown from a series of media appearances, openings and announcements by key players in Indian business and politics. Speaking to The Hindu newspaper , magnate Anand Mahindra said the country “must hurry to fill the gap left by China.” In early November, Prime Minister Narendra Modi announced that his government is releasing $1.2 trillion (1,200 billion) to improve logistics and business development . India, and not China, is expected to have the highest population in the world next year. More than 1.4 billion people now live in both India and China. That fact, plus a growing middle class, makes India an interesting market for multinationals. Compared to other major economies, the country has so far suffered less from inflation (currently between 6 and 7 percent). But before companies will set up their production lines there, according to analysts, something has to change. The main problem is the infrastructure, says economist Pravakar Sahoo. “Roads, other transport links, the electricity grid and water… Those facilities are crucial. Not only to run factories, but also to transport the workforce. Having a good road network also makes traffic to the workshop easier, more productive. And finally, it is necessary for transport and logistics,” explains the professor, affiliated with the Institute of Economic Growth (IEG) research institute. The prime minister’s new plan must therefore succeed. Immediately after he was elected, Modi launched the broad economic plan ‘Make in India’ to improve production, sales and infrastructure across the country. With support for start-ups and smaller manufacturing companies, he wants to encourage his own residents to buy stuff made in India, instead of, say, stuff made in China. The program covers various sectors, from textiles to aviation, food to renewable energy. The new defense systems in particular have been presented with great fanfare – although the prestigious projects are not so much manufactured in India as they are put together (assembly). Analysts differ on whether Indian workers have enough specific knowledge and technological know-how. According to some, other Asian countries, such as Vietnam and the Philippines, are more suitable for producing more advanced technology – including from Apple, if that company does decide to take even more from China (still the bulk). Most international orders now processed in India mainly involve assembly. India made up for the lack of specialist skills with the use of English. Economist Sahoo points out that these specializations are being worked on. This year, India announced the country’s first semiconductor factory, an investment of nearly $20 billion, in the state of Gujarat. In addition, the economist points to the enormous labor potential: “In India, 900 million people are part of the working population. Moreover, they are on average a lot younger than in other Asian countries. If companies put in a little effort, they can train these young people.” Manufacturers already operating in India will likely need to scale significantly to qualify for a full relocation. In its own market, companies rarely grow “beyond a medium format”, according to the researcher. After all, the regional market within the gigantic country of India is often large enough. To stimulate foreign investment and establishment, suppliers of phone manufacturers such as Apple and Samsung received subsidies in 2020. Many administrative requirements were also relaxed. That is still a tricky point, experts tell NRC . Make in India made Indian federal bureaucracy easier, but discrepancies still exist between the states, or between one state and the central government. “Unlike China, India is a democracy,” says economist Sahoo. “So you’ll sometimes have to deal with domestic politics.” Delay Sahoo was previously critical of Make’s progress in India. The plan was delayed by the corona pandemic and the war in Ukraine. But also through decisions by Modi himself, such as the controversial ‘demonitisation’, whereby frequently used banknotes were taken out of circulation overnight. The vast majority of India’s workers are still day laborers or work in the informal economy. The original plan would have created 100 million jobs in manufacturing by 2022, and that sector’s share of gross domestic product would be 25 percent. Those promises have now been pushed back to 2025. On the telephone, the IEG economist does endorse the intention of the initiative. “Make in India is a very broad project,” he says. According to Sahoo, the developments – infrastructure, training, bureaucracy – are intertwined. As a result, he says, it will take “at least another ten, maybe twenty years” before tech products are made in India on a large scale. However, as China loses its appeal, the demand now coming from outside could accelerate that development. A version of this article also appeared in the newspaper of October 10, 2022