Key Points

India may lose some low paying jobs, but if we see holistically currently, India earns USD 30 per iPhone, much of it is given back to Apple as subsidy under the Production Linked Subsidy (PLI) scheme. Also India is reducing tariffs on key smartphone components at the request of big firms like Apple, which is hurting domestic industry who are into building a local manufacturing ecosystem.

"For every iPhone sold at around USD 1,000 in the US, India's share is less than USD 30. Yet, in trade data, the full USD 7 billion export value adds to the US trade deficit," says Ajay Srivastava founder GTRI.

If Apple moves its manufacturing to US, India can increase its focus on new age technologies and move from shallow assembly lines of smart phones.

"If Apple's assembly moves out, India will be forced to stop propping up shallow assembly lines and instead invest in deeper manufacturing--chips, displays, batteries, and beyond," says Srivastava.

Every iPhone, made in India carries the imprint of a dozen countries, through its software, design and brand which carries a lion's share of the value. A made in India iPhone of USD 1000, carries a value of about USD 450 for the device, US component makers like Qualcomm and Broadcom gets another USD 80. Taiwan gets USD 150 for chip manufacturing, South Korea adds USD 90 for OLED screens and memory chips and Japan contributes USD 85 for camera. Other countries like Germany, Vietnam and Malaysia account for another USD 45 for smaller parts.

India and China as manufacturers get a mere USD 30 per device, which is less than 3 per cent of the device cost. But manufacturing units while returns low in value, is high in employment. About 3 lakh workers in China and 60,000 in India works in these units. GTRI says this is the reason why Trump wants Apple to shift its manufacturing to US.

"This is precisely the segment of the supply chain Trump wants to bring back to the U.S.--not because it's high-tech, but because it delivers jobs." says Srivastava

Moving assembly units from India will create entry-level jobs in the US, but production cost would rise multi-fold for Apple. In India Apple pays an average of USD 290 per month to assembly workers, under U.S minimum wage laws it will rise to USD 2900 - a 13fold increase. The cost of assembling a device will increase from USD 30 to USD 390 per device. Overall, Apple profit per device will reduce to USD 60 from USD 450 unless it raises price of iPhone which will hit American buyers.

Will Tim Cook, Apple CEO sacrifice such a big portion of its high profit to rebuild America or he will go with a commercial decision, is still to be answered.

There are many questions still to be answered. Is Trump playing a pressure tactics through these statements to put pressure on India for a favourable trade deal under the ongoing negotiations. Why did Trump didn't asked Cook to move manufacturing from China, which still makes 85 per cent of iPhones, India contributes only 15 per cent.

- ANI