Even if the United States imposes a 25 percent tariff on India’s iPhone, the total cost of production will remain much less if compared to the manufacture of devices in the United States, according to a report issued by the World Trade Research Initiative (GTRI).
This comes amid a statement issued by US President Donald Trump, and threatened to impose a 25 percent tariff on iPhone if Apple decides to make it in India. However, the GTRI report showed that industrialization in India is still costly, despite these duties.
The report is divided into the current value chain of $ 1,000 (about 83,400 rupees), which includes contributions from more than ten countries. Apple maintains the largest share of value, about $ 450 (about 37,530 rupees) per device, through its brand, programs and design.
He also added that American components, such as Qualcomm and Broadcom, add $ 80 (about 6,672 rupees), while Taiwan contributes $ 150 (about 12,510 rupees) by manufacturing chips. South Korea adds $ 90 (approximately 7,506 rupees) via OLED screens and memory chips, and Japan provides $ 85 (about 7,089 rupees), mainly through camera systems. Germany, Vietnam and Malaysia represent another $ 45 (about 3,753 rupees) through smaller parts.
GTRI stated that China and India, although they are major players at the iPhone Association, earn only about $ 30 (about 2,502 rupees) for each device. This is less than 3 percent of the total retail price of the iPhone.
The report argues that the manufacture of iPhone devices in India is still economically viable even if a 25 percent tariff is applied.
This is mainly due to the acute difference in labor costs between India and the United States in India, and gathering workers get about $ 230 (about 19,182 rupees) per month, while in the United States like California, labor costs may rise to about 2900 dollars (about 2,41,860 rupees) per month due to the minimum devices laws.
As a result, the collection of iPhone in India costs about $ 30 (about 2,502 rupees), while the same process in the United States will cost about $ 390 (about 32,526 rupees). In addition to this Apple, Apple gets the use of the incentives associated with production (PLI) to manufacture iPhone in India from the government.
If Apple has turned production to the United States, its profit may decrease for each iPhone significantly from $ 450 (about 37,530 rupees) to only $ 60 (about 5,004 rupees), unless retail prices are dramatically increased.
The GTRI report highlighted how global value chains and employment cost differences make a competitive option to manufacture, even in the face of potential American trade restrictions.
(This story has not been edited by NDTV and is automatically created from a common summary.)
