China import delays likely to put Apple's India plans in jeopardy

iPhone 17 plans, localisation drive hit by China delays

Mobile device companies — which also include vendors of Apple Inc who assemble iPhones, among others — are facing a major concern from China.

 

The growing delay in permission to import crucial machinery from China to make iPhones and for the upcoming new model could adversely impact not only the launch of the iPhone 17 but also their possible plan to double production of phones from the country, to meet the entire US demand for iPhones and overcome the high import duties imposed on China by the US.

 

Similar delays in providing clearance for imports are also reflected in other areas, including tunnel drilling machines, as the government works aggressively on new tunnel construction, and machines used for solar energy, apart from electronics.

 

A top source in an electronics major who is involved in discussions with the government says: “Generally, Apple Inc launches one new mobile phone a year, while others do at least two a year. To assemble the new models in India, one has to retrofit a lot of the new imported equipment. There is an increasing delay which could impact the launch of new models. Also, we fear imports of secondhand machinery for assembling phones, which entails shifting capacity from China to India, will also come under scrutiny.”

 

A spokesperson for Apple Inc did not respond to queries on the issue until the time of going to press. 

 

A plan has been mooted, say sources, that Apple Inc is considering more than doubling the capacity of iPhone production in the country, which is expected to hit, in the normal course, $26–27 billion by 2025-26 (FY26), by 12–24 months. That would help them meet the entire requirement of the US ($40 billion), instead of exporting out of China, where higher duties of 20 per cent have been slapped by the US compared to zero duty from India in the next three months, which might go up to 10 per cent after that.

 

In 2024-25, Apple Inc has already exported iPhones worth ₹1.5 trillion from India, about 20 per cent of which has gone to the US.

 

However, to do so, Apple vendors have to build new capacity quickly and import capital equipment from China, which, if delayed, could jeopardise the entire plan. That will also ensure a marked shift in iPhone production from China to India, which by FY26 is expected to account for 25 per cent of the global production value of the phone — a move which many experts say China is bound to resist.

 

Not only that, with May around the corner, the Apple vendors would need to import capital equipment to retrofit for the new iPhone 17 model and also for their homegrown supply chain, as they would need changes in some of the components or processes being made in the country.

 

The good news is that Tata Electronics and Foxconn are already working to set up new capacity to make iPhones. Apart from that, homegrown engineering companies are also working overtime to build capital equipment according to requirements of companies like Apple Inc and their vendors to increase localisation.