India needs more Apples: Replicating Apple's model to attract top brands

While the jury is still out on many of the production-linked incentive schemes (PLI) introduced by the Indian government, one undeniable success has been the scheme targeting smartphone production. Used largely by Apple, and to a lesser extent by Samsung, this scheme has helped India export over $24 billion worth of smartphones in FY25, up from virtually zero in FY18. Today, India is the world’s third-largest smartphone exporter, after China and Vietnam. Apple now assembles about 20 per cent of all iPhones in India, and this percentage is set to keep rising. While local value addition is limited — still in the low double digit, it will increase over time as the component ecosystem slowly comes online. 

The success in attracting Apple has been critical. It is now well-documented that Apple, through its training, focus on quality and scale was critical in helping China build a world-class manufacturing ecosystem. Hopefully, it can do the same for India. 

Apple is key in being a leading multinational company (MNC) that is closely tracked. If Apple can eventually source 50-75 million phones from India (worth $50 billion) with its focus on quality and finish, what excuse can any MNC offer its board for why they cannot source from India? Can labour, logistics or regulations really be that impossible in India if Apple can source this quantum of world-class product from the country? The demonstration effect is huge. 

The PLI for smartphones was extremely sophisticated in design, a win-win for all parties. The government must have consulted Apple/ Samsung and taken inputs when designing the scheme. There must have been a plan to reach out and engage the companies. Given the global competition to become a sourcing hub for Apple and our lack of capabilities in the field, we must have been able to address their apprehensions and assure them of a policy feedback loop. Given how quickly Apple has been able to scale, someone in the government took the initiative to ensure all obstacles to ramping production were jointly cleared. They deserve credit and gratitude for enabling India to become a world-scale player in smartphones and for helping create over  700,000 jobs ( direct and indirect). We can now build on this to develop into a broader electronics manufacturing hub.

 

We must take the Apple template and broaden it. We must target top MNCs across key sectors where India has a competitive advantage, engage them, and understand their concerns. Design PLI-type schemes to get them to commit to sourcing more from India. The United States today sources about $450 billion from China, about 50 per cent of this comes from just 50 brands and contract suppliers. These are the companies to go after.

 

We can break this down into two buckets. The first is brands like Nike, a world leader in its industry (revenue of $50 billion). Nike does not manufacture much in-house, but sources very little from India. We need to understand why India is not on their sourcing map despite the country having strengths in apparel and footwear. Getting Nike to commit will force their global suppliers to come into India and be seen as a proof of concept for other athleisure players. A policy framework can be designed to compensate for initial cost differentials, just as the smartphone PLI did.

 

The reality is that all companies need to de-risk their supply chains. Business as usual is not possible. Companies need an alternative geopolitically stable location. Other examples in this bucket could be Dell for hardware, Mattel for toys and Victoria’s Secret in innerwear— all industry leaders with limited India sourcing. This is the Apple model.

 

Another model would be target MNCs with a large manufacturing footprint in China. Foreign-invested enterprises employ about 40 million workers there and account for nearly $1 trillion of China’s total exports of $3.6 trillion. Most of these companies do not want to expand further in China. They need an alternative low-cost location.

 

Despite our large domestic market, technical manpower, growing working-age population, and well-developed capital markets, India has found it difficult to attract these companies. It may be that we are not competitive enough given our infrastructure constraints, or there are regulatory hurdles, or just the perception of being a tough place to do business.

 

We need focussed effort on the part of the government to target these 50 companies. It is astonishing to me that none of us know who engaged with Apple and got them over the line? It should be a case study in government. The time has come to form a high-level task force to target leading companies and get them to commit to India in a more substantial manner.

 

The task force’s job will be to connect target companies with the highest levels of government, resolve cross-ministerial issues, and coordinate between the Centre and states. It should also understand policy gaps and recommend solutions.

 

This body must report to the highest levels of government, with clear target companies and timelines. It should include representatives from all key ministries and help design the necessary incentives and reforms to attract global firms. Its progress must be reviewed periodically, ideally by the Prime Minister himself, given the urgency of the issue.

 

Apple’s India sourcing success did not happen by chance. I am sure there were large hurdles that were jointly overcome. India now needs to repeat this playbook with at least 50 more companies, creating policy frameworks that address the specific concerns of each targeted industry leader. Once they commit, their suppliers will follow, and smaller industry peers won’t want to be left behind.

 

Other countries, whether Singapore, Malaysia, or Vietnam, have done exactly this, actively travelling the world to attract investments. The focus must be on manufacturing as we are already well-established as a destination for services.

 

Global supply chains are being forced to reorient as companies need to de-risk. China, at 32 per cent of global manufacturing, has peaked. The world is uncomfortable with China gaining further share. Over the next 25 years, China will also see a net reduction of 225 million in its working-age population. The West is becoming uncompetitive across industries, and artificial intelligence cannot solve all people and cost concerns. As China moves up the value chain and challenges Western incumbents, there is a strong case for partnerships between Indian and global companies. India has opportunities in both precision manufacturing and mass assembly.

 

This is our chance to get into global value chains. We may also be given a relative advantage by the Trump tariffs. This requires engagement at the highest levels of government and in a focussed manner. We have missed many buses in the last 50 years, we should not miss this one.

 

The author is with Amansa Capital