(Bloomberg) -- Apple Inc.’s iPhone exports from India crossed $1 billion in the five months since April, according to people familiar with the matter, signaling the South Asian nation is making progress with its bid to become a force in electronics manufacturing.
At the current rate, outbound shipments of India-made iPhones, mainly to Europe and the Middle East, are set to reach $2.5 billion in the 12 months through March 2023, the people said. That’s almost double the $1.3 billion worth of iPhones India exported in the year through March 2022, the people said, asking not to be named as the data isn’t public.
While India makes up just a small fraction of iPhone output, rising exports bode well for Prime Minister Narendra Modi’s plan to make the country an alternative to China as factory to the world. Apple, which long made most of its iPhones in China, is seeking alternatives as Xi Jinping’s administration clashes with the US government and imposes lockdowns across the country that have disrupted economic activity.
“The healthy growth in Apple’s manufacturing scale and export shows India is gradually assuming an important position in the company’s China plus one strategy,” said Navkendar Singh, an analyst at tech researcher IDC. “And for India, this a big sign of the success of its financial incentives scheme.”
Apple representatives didn’t immediately respond to an email seeking comment. The Cupertino, California-based company flirted with the idea of making its prized iPhones in India for years before Modi’s $6 billion incentive push in 2020 drove the US tech giant to get its suppliers to ramp up production.
Apple’s key Taiwanese contract manufacturers Foxconn Technology Group, Wistron Corp. and Pegatron Corp. currently make iPhones at plants in Southern India. All three won manufacturing incentives under a federal government plan.
To be sure, India is still far behind China. About 3 million iPhones were made in India last year, compared with 230 million in China, according to Bloomberg Intelligence estimates.
The devices exported from India from April to August this year comprise iPhone 11, 12 and 13 models, and exports of the new 14 line will begin soon, the people said. Apple began making the iPhone 14 in India last month -- sooner than anticipated -- after a surprisingly smooth production rollout that slashed the lag between Chinese and Indian output from months to mere weeks.
Beyond smartphones, India is drawing up plans to boost the financial incentives for tablet and laptop makers, hoping to woo Apple to make MacBooks and iPads locally as well as attract other brands.
But moving out of China, where Apple has built a deep supply chain for close to two decades, isn’t easy. A Bloomberg Intelligence analysis estimated it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones are being made.