India closes in on China in iPhone output, but revenue gap remains wide

India is narrowing the gap with China in iPhone production but lags significantly in contributing to Apple’s global revenue. This disparity stems from price sensitivity and affordability challenges among Indian consumers, according to a report by The Economic Times.

Apple posted a record revenue of $8 billion in India for FY24, representing just over 2 per cent of its global revenue of $391 billion. In contrast, Greater China — including Mainland China, Hong Kong, Macau, and Taiwan — accounted for $66.95 billion, or over 17 per cent of global earnings. By FY26, India’s revenue is projected to rise to $11 billion, the report noted.

Apple follows an October-September financial year.

Made-in-India iPhones gain traction

During FY24, iPhones manufactured in India accounted for 14–15 per cent of Apple’s global production capacity. Experts believe this share could increase to 26–30 per cent by 2027, underscoring India’s growing strategic importance as Apple’s only iPhone manufacturing base outside China.

While India may reach China’s iPhone production levels within five years, closing the revenue gap could take 10–15 years. In FY20, China contributed 14.68 per cent of Apple’s total revenue compared to India’s 0.66 per cent.

Experts also highlighted that Apple’s India revenue includes sales of iPhones, MacBooks, iPads, and services, but manufacturing output is not reflected in local financial records. Apple’s decision to shift manufacturing to India, which began in 2020, was driven by the need to diversify amid geopolitical dynamics and to establish an export hub.

India as an export hub

Apple is the first global value chain to position India as an export hub, according to a government official involved in the smartphone production-linked incentive (PLI) scheme. Currently, 70 per cent of India-made iPhones are exported, a figure expected to increase to 80–85 per cent as production scales up.

Unlike Apple, other global smartphone manufacturers — such as Samsung, Xiaomi, Oppo, and Realme — primarily use their Indian production facilities to meet domestic demand. Samsung, however, is India’s second-largest smartphone exporter after Apple, with 30–35 per cent of its local output shipped overseas.

India’s large consumer base presents significant growth potential for Apple, but low per capita income remains a challenge. China’s per capita income is five times that of India and makes it Apple’s second-largest iPhone market after the US.

Between April and October 2024, Apple’s India production exceeded $9 billion, with exports nearing $7 billion—a record for any company operating in India, the report said.

Modest iPhone penetration in India

Despite being the world’s second-largest mobile phone market, iPhone penetration in India remains low at 6–7 per cent of the total smartphone market. The remaining 94 per cent is dominated by Android devices from brands like Samsung, Oppo, Vivo, and Xiaomi.

iPhones lead Apple’s India sales

iPhones account for 65–70 per cent of Apple’s sales in India, compared to their 52 per cent contribution to Apple’s global revenue of $201.1 billion in FY24. Other product lines, including MacBook laptops, have also experienced strong sales in the Indian market. (Business Standard)