PLI Scheme: India’s Strategic Gift to Apple’s Global Ambitions

As Apple Inc. deepens its manufacturing footprint in India, the Indian government’s flagship Production Linked Incentive (PLI) Scheme is emerging as a powerful enabler of this expansion. With India playing an increasingly central role in Apple’s global supply chain, the PLI scheme is not just an incentive—it's a strategic inflection point with ripple effects across pricing, geopolitical risk management, and global sales.

Apple’s India Strategy and the PLI Advantage

Apple’s major manufacturing partners—Foxconn, Pegatron, and Wistron (Tata-owned)—have been selected under the Indian government’s PLI scheme for large-scale electronics manufacturing. The scheme offers 4% to 6% financial incentive on incremental sales of mobile phones made in India over a 5-year period.

This incentive has already contributed to Apple crossing $10 billion in iPhone exports from India in FY2024–25, a record figure that underlines the scheme’s effectiveness.

What is the PLI Scheme?

The Production Linked Incentive (PLI) Scheme is a flagship initiative by the Government of India to boost domestic manufacturing, reduce import dependence, and increase exports by offering financial incentives on incremental sales of goods manufactured in India.

For mobile and electronics manufacturing, PLI provides incentives of 4% to 6% on incremental sales (over the base year) of goods manufactured in India for five years.

How Apple is Benefiting from the PLI Scheme

Apple itself doesn’t manufacture directly, but its contract manufacturers—Foxconn, Wistron (now Tata-owned), and Pegatron—are approved beneficiaries of the PLI scheme under the mobile phone category.

Key Benefits to Apple via PLI:

1. Direct Cost Reduction:
   Apple’s suppliers get cash incentives based on the value of phones produced and sold from India. These savings are passed along the supply chain, ultimately making Indian-made iPhones more cost-competitive.

2. Boost to Local Production:
   The PLI scheme has led to a massive expansion of Apple’s supplier ecosystem in India. Foxconn, for example, has committed over ₹8,000 crore ($1B+) in Tamil Nadu to expand its iPhone assembly lines.

3. Export Momentum:
   Apple has already exported over $10 billion worth of iPhones from India in FY 2024–25, according to Indian government data. The PLI scheme directly supports this export-led growth by offering performance-based incentives.

4. Job Creation & MSME Integration:
   Through its suppliers, Apple’s Indian expansion is generating thousands of new jobs, many of which are in MSMEs supplying packaging, components, logistics, and assembly tools.

Strategic Relevance for Apple

Apple’s global strategy increasingly depends on diversifying its manufacturing base beyond China. India, with its PLI incentives, skilled labor, and growing domestic market, offers a scalable and politically safer alternative.

Even if geopolitical risks (like Trump’s tariff proposals) materialize, PLI makes India cost-efficient enough to remain attractive. The government has also expanded the scheme to include components, semiconductors, and IT hardware, which further benefits Apple’s long-term ecosystem strategy.

Expert Insight

“PLI is not just a subsidy. It’s a strategic signal to global companies that India is open for high-tech manufacturing,” said Rajeev Chandrasekhar, Minister of Electronics & IT, in a recent public forum.

Summary

The PLI Scheme is central to Apple’s India strategy. It not only reduces production costs but also gives the company a long-term base in a geopolitically stable and growing economy. For India, it’s a win-win—Apple’s expansion strengthens exports, technology transfer, and MSME participation.

Projected Savings: India vs USA

One of the biggest reasons Apple is scaling up in India is the sheer cost efficiency. According to estimates from the Global Trade Research Initiative (GTRI):

• Cost to produce an iPhone in India: Approx. $30–$40 in labor

• Cost to produce the same in the U.S.: Approx. $390–$400

• Savings per device (even after PLI incentive): Over $300

When Apple ships these Indian-made phones across Europe, Asia, and the Middle East, it enjoys massive savings per unit, boosting margins without compromising on quality or speed.

Additionally, the PLI cashback on sales can reduce operational overheads, enabling Apple to price more competitively or increase profitability in mid-range and premium segments.

Can Trump’s 25% Tariff Impact Apple’s India Strategy?

U.S. President Donald Trump’s campaign remark proposing a 25% tariff on iPhones not made in the U.S. has stirred global headlines. However, for Apple’s India strategy, this threat is significant in optics but limited in impact.

Here’s why:

• Even after a 25% tariff, Indian-made iPhones will still be $250–$270 cheaper than U.S.-made ones.

• Apple is unlikely to shift production back to the U.S., where infrastructure, labor cost, and component ecosystems are not as evolved.

• The U.S. is just one piece of the global puzzle—India-made iPhones are meant for Europe, Asia, Middle East, and Africa too, where no such tariff applies.

So, while Trump’s statement may add political pressure, the economic logic of India’s manufacturing advantage remains intact. Apple is expected to continue investing in India regardless of the U.S. tariff climate.

Middle East: A Rising Market for Apple’s India-Made Products

Apple’s India strategy isn't only about cost—it’s also about proximity to fast-growing markets. The Middle East is emerging as one of Apple’s strongest growth regions, particularly in UAE, Saudi Arabia, and Qatar.

How India Helps Apple Target Middle East:

• Reduced shipping time and cost from Indian ports compared to China

• Preferential trade access via existing agreements and simplified customs routes

• Cultural and linguistic talent availability to service Arabic content and local integrations

With Apple producing more in India, Middle Eastern retailers get access to fresher inventory, faster customization cycles, and competitive pricing—all of which position Apple strongly against rivals like Samsung and Huawei.

Ripple Effect: How MSMEs and India's Economy Gain

Apple’s production scale-up has catalyzed opportunities for over 200 Indian MSMEs in areas such as:

• Precision engineering

• Logistics and supply chain

• Packaging and plastics

• Skill development and training

This strengthens the local manufacturing ecosystem and aligns with the Indian government’s vision of becoming a global electronics export hub.

Concluding Observation

India’s PLI scheme is proving to be a catalyst in Apple’s global supply chain transformation. With projected savings of hundreds of dollars per unit, a buffer against U.S. tariff risks, and strategic market access to the Middle East and beyond, Apple’s India bet is not just smart—it’s essential.

For Indian policymakers and MSMEs, this is a moment of validation and opportunity. If nurtured well, it could mark the start of India’s rise as the next great tech manufacturing power.

Published by SMEStreet.in – India’s Premier Platform for MSME Insights and Global Trade Commentary