Apple is making headlines with its decision to manufacture the upcoming iPhone 16 Pro models in India. This move is a part of Apple’s larger strategy to expand its manufacturing capabilities outside of China and is seen as a significant boost for India’s “Make in India” initiative. However, the question on many consumers’ minds is whether this will lead to more affordable iPhone Pro models in the Indian market. The answer, according to experts, might not be as straightforward as hoped.

Key Points:

Made-in-India iPhone Pro Models: Apple is to produce the iPhone 16 Pro in India, marking a significant step for the “Make in India” initiative.

Unlikely Price Drop: Experts suggest that retail prices may not significantly reduce despite local manufacturing due to broader economic factors.

Limited Local Value Addition: Only about 10% of the iPhone’s value is added in India, with most components still imported.

Festive Season Discounts: As Apple aggressively promotes deals, consumers can expect major offers during festive seasons.

India’s Growing Role: The move is part of a larger trend of reducing dependence on China, with India becoming a key player in global electronics manufacturing.

Will Local Production Lead to Cheaper iPhones?

Despite the excitement surrounding Apple’s decision to manufacture iPhone Pro models in India, the chances of seeing a substantial price drop in these devices appear slim. Industry experts believe that while local production could theoretically lower costs, several factors could prevent these savings from being passed on to consumers.

Prabhu Ram, Vice President of Industry Research Group (IRG) at CyberMedia Research (CMR), notes that local manufacturing might lead to minor price reductions, but broader economic factors—such as global inflation, supply chain disruptions, and currency fluctuations—will likely keep retail prices stable. “While local production could lead to some price reductions, overall retail prices may still be influenced by broader economic factors,” he explains.

Complexities in Pricing: The Real Challenge

Navkendar Singh, Associate Vice President at IDC, adds that even though iPhones are assembled in India, the impact on pricing is minimal. The overall duty on these assembled units remains high since most components are still imported as completely knocked down (CKD) kits. “India is only assembling iPhones, with the overall value-added being below 10 percent for an iPhone,” Singh points out. This limited local value addition suggests that the potential for a significant price drop remains unlikely.

Festive Season Offers: The Best Bet for Consumers

While a direct reduction in retail prices might not be on the horizon, Apple has shown a strong tendency to offer significant discounts during the festive season. According to Prachir Singh, Senior Analyst at Counterpoint, Apple has been increasingly aggressive with its promotions and offers during these periods. “The price list of iPhones has been consistent. However, Apple has been quite aggressive with offers and promotions, especially during the festive season. I believe this will continue,” he says. For consumers, this means that the best opportunity to grab a new iPhone at a reduced price will likely be during these promotional periods.

India’s Strategic Importance in Global Manufacturing

Apple’s decision to manufacture iPhones in India is part of a broader industry trend aimed at reducing reliance on China. Google, too, has confirmed that it will manufacture its Pixel 8 smartphones in India for export to the U.S. market. This shift is driven by both geopolitical considerations and the Indian government’s efforts to attract global tech giants to set up production facilities in the country.

Navkendar Singh attributes this shift to India’s favorable business environment, including lower operational costs, a skilled workforce, and government incentives. “India will be an important part of the electronics value chain for the next few decades. So these companies would want to start setting up their base in India early on to meet domestic demand and also try to make India as their main manufacturing and export hub in the next few years,” he emphasizes.

Conclusion: What’s in Store for Consumers?

While Apple’s move to produce iPhone Pro models in India is a positive step for the country’s manufacturing sector, consumers should not expect a significant drop in prices. The complexities of global supply chains and local production constraints mean that any cost savings are unlikely to translate into cheaper retail prices. However, with Apple’s aggressive promotional strategies during festive seasons, consumers can still look forward to some excellent deals on the latest iPhone models. As India continues to grow as a manufacturing hub, the long-term benefits of this shift could extend beyond just pricing, potentially influencing global supply chains and the electronics market at large.

Via @ businesstoday