Should your company follow Apple to India?

In case you skipped the memo, India is engaged in a widespread digital transformation across the country and its economy — and Apple’s investments locally are examples of this broad change.

It’s reasonably evident if you stop to consider what’s going on. Apple and its supply chain are investing billions in creating new manufacturing centers across India, and those investments drive further spending on infrastructure – roads, accommodation, and growth in service industries feeding them all. It means longer runways, better airports, improved property construction, more modern city management infrastructure, banking, rail, and more. 

Build them up…

One good illustration is the story emerging around Foxconn’s new iPhone manufacturing city in Devenahalli, north of Bengaluru, India. The $2.5 billion factory, set to be Foxconn’s second-largest outside China, will occupy the space of 220 football fields and create 40,000 jobs. National and state investment to support of the project is being seen in property construction and infrastructure. Regional property prices are rising rapidly as a result.

These investments support a consumer electronics manufacturing industry racing to set itself up in the country. They all drive jobs, of course, though it’s important to note that if the same investments took place in so-called developed economies, the cost of those investments would be cripplingly high, and the skills required would be absent. 

Foxconn’s investment isn’t unique. India’s huge Tata Group is also investing in the Apple supply chain, component suppliers are building out their presence there, and just this week we learned AirPods supplier Jabil is also preparing to build a second factory in India’s Tamil Nadu region as AirPods manufacturing begins there. (Apple currently makes Macs and iPads in Vietnam as well as in China).

Apple to make all its iPhones in India?

The other side of all this investment is digital. 

When it comes to fixed broadband, India is one of those nations that had weaknesses in coverage, but this is changing as network infrastructure is deployed. The scale is significant. Speaking at a Bharat Telecom event, India’s Union Minister for Communications and Development of North Eastern Region, Jyotiraditya Scindia, described the rapid scale of deployment: In just 22 months, we connected 99% of our villages with 5G and brought 82% of our population onto the network, deploying 470,000 towers — this is not evolution; it is a telecom revolution,” he said. 

“This is not evolution; it is a telecom revolution,” Scindia said. 

Apple fans will be interested in something else he claimed: “Apple has decided to source and produce all its mobile phones in India in the coming years,” he said. 

Recent speculation has been that Apple will make all its iPhones for the US market in India; this is the first time we’ve heard that it might make all the iPhones it sells worldwide there.

Given that China is Apple’s second-largest market, I’m inclined to think the company hopes to continue production there to serve Chinese consumers, while opening up a third front for manufacturing in Brazil in the coming months; that would keep it from becoming completely reliant on one nation for its iPhone supply chain.

All the same, it’s not impossible that having invested so deeply in nurturing its business in India Apple has now decided to increase iPhone manufacturing there beyond current expectations. Time will tell. 

Apple isn’t the only company taking a position in India. Many other electronics firms are working to build up their business, too, like Apple, also hoping to mitigate some of the damaging effects of US tariffs on international trade. They recognize, as so many do, that unless US consumers still enjoy access to affordable consumer goods, inflation, shortages, and unemployment loom. All the same, the migration to new production centers will take time, given the degree of investment required.

Apple, for example, has spent almost a decade building toward this transition.

The network opportunity

The flipside to all of this activity is that national infrastructure is being improved, which opens opportunities beyond manufacturing. Services, Apple’s other strong business, also seem set to benefit from the investments in network connectivity. Can more focus on Apple TV in India be far behind?

A survey commissioned by Amazon revealed a strong appetite for movie and TV streaming in India, a need that can now be met by more people in more regions of the country thanks to the expansion of network infrastructure. That’s driving rapid growth in India’s app economy, according to Apple.

Developers in India generated around $5 billion in sales last year, the company said. “The App Store has been an economic miracle for developers in India and all around the world, and we’re thrilled to support their work,” said Apple CEO Tim Cook.

So, what am I saying? Only that when considering Apple’s business in India, it’s important to put it into context, and once you do so it’s hard to ignore that the confluence of different forces required to support Apple’s investment means smaller enterprises can perhaps identify their own opportunities now, thanks to India’s investments in physical and digital infrastructure. While other markets get closed down, it looks as if India is open to business – though it remains to be seen the extent to which India’s emerging economic miracle will come at the cost of one of its closest neighbors, China.

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