The next iPhone 17 you unbox might not say "Made in China," but "Made in India," assembled at the Tata group’s facility in Tamil Nadu or Foxconn’s plant in Karnataka. As India becomes the world’s new smartphone manufacturing hub, these names are now part of the global supply chain that was once dominated by a single country – China – signalling a big shift in manufacturing.

For decades, India's exports were defined by traditional products like refined petroleum and precious gems. Now however, India’s mobile phone exports have skyrocketed from a mere Rs 1,500 crore in FY15 to Rs 2 lakh crore in FY25. This meteoric rise has, for the first time, placed smartphones among India's top exported goods. As these exports grow, the US has exempted Indian electronics from tariffs.

A study by the Centre for Development Studies (CDS) notes that while China increasingly focuses on high-end components and design, “India has an opportunity to become the next major global hub for electronics manufacturing, particularly in assembly.”

A key driver of this success is the government's Production-Linked Incentive (PLI) scheme. Its principle is simple: the more a company produces and exports, the more it earns in incentives. The policy has been effective, attracting cumulative investments of Rs 12,390 crore and creating over 1.3 lakh jobs as of mid-2025.

Despite this progress, challenges remain. India is still heavily dependent on components like display panels and batteries imported from China. And while India became the world’s third-largest mobile phone exporter in 2024, its $20.5 billion in shipments is a fraction of China's $135 billion. To close this gap, India must move beyond assembly and build a complete ecosystem encompassing design, R&D, and component manufacturing.

In this edition of Chart of the Week, we explore how government policy and a global supply chain shift are boosting India’s mobile phone exports and local champions like Dixon and Tata. The other part is to look at the hurdles like high costs and competition from Vietnam that will shape India's smartphone manufacturing future.

'Make in India' opens the door to electronics wins

The ‘Make in India’ push, backed by the PLI scheme, has made the country an attractive destination for global electronics giants. The strategy has also benefited the government financially: between FY21 and FY24, it generated Rs 1.1 lakh crore in revenue while paying out about Rs 5,800 crore in incentives. Global players like Foxconn and Pegatron have ramped up production, while Tata Electronics has become a major force by acquiring parts of Wistron and Pegatron’s Indian operations.

It's not just global players setting up shop; local champions are rising to the occasion. Dixon Technologies has emerged as a star performer. Once known for assembling TVs and basic phones, the company now manufactures smartphones for heavyweights like Samsung, Motorola, and most recently, Google (Pixel). Now, this consumer electronics firm is taking the next logical step: making components. It is investing around Rs 1,000 crore to produce camera modules, fingerprint sensors, and other key parts with global partners, reducing India's reliance on imports. 

Atul Lall, Vice Chairman and MD, said, “We expect a strong order book ahead of the festive season to drive 40-45% revenue growth this year. A large part of the contribution will still be coming for mobiles.” He added that margins this year should be similar to those of last year, but will start to expand as the new components business is integrated into the system.

Ultimately, global tech giants are flocking to India for four simple reasons: rising domestic demand, government incentives, competitive manufacturing costs, and the push to diversify supply chains beyond China.

The hidden challenges of India's global rise

Despite its rapid growth, India's manufacturing ambitions face roadblocks. A primary hurdle is high logistics costs, which eat up 13–14% of the country's GDP—nearly double the rate in developed economies. While this is better than rival Vietnam's 18%, it's comparable to China's, which stands around 14.1%. Delays at ports, poor last-mile connectivity, and inefficient warehousing continue to hamper efficiency. India aims to reduce these costs to 8-9% by 2030. 

An unexpected brain drain presents another complex challenge. Foxconn recently pulled hundreds of Chinese engineers and technicians from its Indian facilities, a move prompted by Beijing's pressure to restrict technology and talent exports to India. While this won't hurt the quality of the phones, it could slow down production. As Bloomberg noted, "Extraction won't impact the quality of production, but it’s likely to affect efficiency on the assembly line.”

Finally, India faces stiff competition and internal challenges. Rivals like Vietnam have a head start due to their mature electronics ecosystems and free trade agreements, which make their exports more competitive. Domestically, India struggles with a shortage of highly skilled workers, a heavy reliance on imported key components such as displays and chips, and a maze of complex regulations that can create friction for businesses.

India's iPhone boom defies global trade wars

Global trade tensions are rewriting the manufacturing map. While the US has imposed steep tariffs on many Indian goods, the iPhone remains a notable exception. To maintain this, Apple CEO Tim Cook made a strategic move, pledging $600 billion in US investments to safeguard the company's rapidly expanding manufacturing base in India.

However, this commitment isn’t about shifting iPhone assembly back to the US. Most of that investment is reportedly for data centres, not factories. Cook has openly admitted that the US lacks the skilled workforce for intricate assembly. A fully American-made iPhone could cost anywhere between $1,500 to $3,500. In India, that same phone rolls off the line for around $1,200, keeping it affordable for the world.

This India-centric strategy is paying off. Despite global trade uncertainty, India shipped $7.5 billion worth of iPhones in just the first four months of FY26—nearly a third of the total for the entire previous year.

However, the ultimate challenge for India is to move beyond just being an assembly line. The long-term game is about building a complete ecosystem for components, semiconductors, and design. Without this crucial step, India remains vulnerable to global political shifts, while its rivals, such as Vietnam, continue to strengthen their own electronics supply chains