{"id":61177,"date":"2022-10-06T00:26:05","date_gmt":"2022-10-06T00:26:05","guid":{"rendered":"https:\/\/tahrir2day.com\/news\/2022\/10\/06\/apple-iphone-can-india-be-chinas-plus-one-to-the-world\/"},"modified":"2022-10-06T00:26:05","modified_gmt":"2022-10-06T00:26:05","slug":"apple-iphone-can-india-be-chinas-plus-one-to-the-world","status":"publish","type":"post","link":"https:\/\/tahrir2day.com\/news\/2022\/10\/06\/apple-iphone-can-india-be-chinas-plus-one-to-the-world\/","title":{"rendered":"Apple iPhone: Can India be China\u2019s \u2018plus one\u2019 to the world?"},"content":{"rendered":"
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Last week, Apple announced plans to manufacture its latest phone model – iPhone 14 – in India, a significant milestone in the company’s strategy to diversify manufacturing outside of China.<\/b><\/p>\n<\/div>\n

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Five percent of iPhone 14 production is set to be shifted to the country this year, much earlier than analysts expected. <\/p>\n<\/div>\n

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A quarter of the company’s iPhones could be produced in India by 2025, analysts at investment bank JP Morgan say.<\/p>\n<\/div>\n

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Apple has been manufacturing iPhones in the southern Indian state of Tamil Nadu since 2017. <\/p>\n<\/div>\n

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But the decision to manufacture its flagship model in India is a notable move as trade tensions between Beijing and Washington show no sign of easing. <\/p>\n<\/div>\n

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The move also gains significance amid the “de-risking” in the global supply chain that is underway due to China’s “zero Covid” policy.<\/p>\n<\/div>\n

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Beijing’s no-holds-barred approach to eradicating the pandemic has led to industrial lockouts and widespread supply chain disruptions<\/p>\n<\/div>\n

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As a result, global companies are increasingly adopting a \u201cplus one\u201d strategy \u2013 or avoiding investing solely in China \u2013 to realign their supply chains. <\/p>\n<\/div>\n

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“Companies are no longer willing to sit around and wait for a change in policy in China or to lump their sourcing needs into one basket,” Oscar De Bok, CEO of logistics company DHL’s supply chain business, told the BBC. <\/p>\n<\/div>\n

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“They want to make sure they have two or three alternatives,” said Mr. De Bok, adding that this “omni-sourcing” trend has clear beneficiaries in countries like India, Vietnam and Mexico.<\/p>\n<\/div>\n

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Mr De Bok was in India’s financial capital Mumbai to announce a 500 million euro ($49 million; \u00a343 million) investment to double DHL’s warehousing capacity and workforce over the next five years. <\/p>\n<\/div>\n

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He said that engagement was partly due to growth in foreign investment in sectors such as manufacturing and electronics, where Prime Minister Narendra Modi’s government is offering financial incentives to companies interested in making India their manufacturing hub.<\/p>\n<\/div>\n

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Mining conglomerate Vedanta Resources has also committed nearly $20 billion in investments as part of this production-linked incentive (PLI) program.<\/p>\n<\/div>\n

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Anil Agarwal, Chairman of Vedanta Resources, said last month that the world is moving towards a “China plus one” strategy and that “India is clearly in a good position”. <\/p>\n<\/div>\n

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India, Asia’s third largest economy, has worked hard to position itself as an attractive manufacturing and export hub for multinational companies. <\/p>\n<\/div>\n

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It has a large domestic market and abundant low-cost talents. <\/p>\n<\/div>\n

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With GDP growth in the 6-7% range and headline inflation more modest than many other parts of the world, India has been one of the best performing major economies this year. <\/p>\n<\/div>\n

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Its merchandise exports surpassed $400 billion after stagnating at $300 billion for nearly a decade.<\/p>\n<\/div>\n

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In addition to fiscal savings, Mr Modi’s government has also pushed hard on bilateral trade deals to integrate India deeper into global supply chains and recalibrate its image as a notoriously slow negotiating partner.<\/p>\n<\/div>\n

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Businesses have welcomed these initiatives. <\/p>\n<\/div>\n

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But India’s approach to trade liberalization has been one step forward and three steps back, experts say.<\/p>\n<\/div>\n

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The rush to sign FTAs \u200b\u200bto improve market access and lower tariffs has been met by calls for self-reliance and increased tariffs on at least 3,000 items, many of them critical inputs in manufacturing processes.<\/p>\n<\/div>\n

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Privately, too, many foreign companies complain about a lack of equal opportunities and growing protectionism.<\/p>\n<\/div>\n

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Small and medium-sized businesses – the backbone of India’s economy – continue to find it difficult to navigate India’s Byzantine bureaucracy. Truly disruptive land acquisition reforms and faster licensing have been elusive, experts say. And the shaky infrastructure remains a major sticking point. <\/p>\n<\/div>\n

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\u201cApple is certainly a success story so far, but making India a manufacturing hub requires not only big headline-grabbing investments, but also a supportive ecosystem for SMEs [Small and Medium Enterprises]”, says Mihir Sharma, director of the Observer Research Foundation (ORF). <\/p>\n<\/div>\n

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“It’s too early to say if all of these investments will be made at scale and if they will be sustainable over time.”<\/p>\n<\/div>\n

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According to Mr Sharma, SMEs – which employ a large proportion of India’s workforce – have been largely excluded from Mr Modi’s tax incentive scheme. <\/p>\n<\/div>\n

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“With the exception of textiles and garments, the program does not cover other labour-intensive manufacturing industries that could allow India to capitalize on the Plus One strategy of export-led growth and create jobs for the 12 million Indians who join each year.” , he says. <\/p>\n<\/div>\n

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Mr Sharma adds that India needs to upskill its workforce and create “a more welcoming business climate” to compete with other Asian economies. <\/p>\n<\/div>\n

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Thailand, Vietnam and South Korea all rank well above India in the World Bank’s Ease of Doing Business rankings. Vietnam has also drawn up a 2030 master plan to build an integrated infrastructure corridor, which is crucial for mass manufacturing.<\/p>\n<\/div>\n

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But despite these age-old challenges, India is better placed than ever to seize this “historic opportunity,” says Alex Capri, a research fellow at the Hinrich Foundation.<\/p>\n<\/div>\n

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He says certain “key concentrated hubs” in India – southern states like Tamil Nadu, Telangana and the National Capital Region in the north – are well positioned to develop critical mass in manufacturing as the US and its allies move away from China disconnect . <\/p>\n<\/div>\n

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This is likely to usher in an era of competitive federalism between states.<\/p>\n<\/div>\n

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India could also benefit from Taiwanese tech companies moving capacity to the country under friend-shoring arrangements to take advantage of the easy availability of cheap talent, adds Mr. Capri.<\/p>\n<\/div>\n

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So is this a turning point?<\/p>\n<\/div>\n

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\u201cOne of my Indian friends told me India never misses an opportunity\u2026 to miss an opportunity. But I think this time is different,\u201d says Mr. Capri. <\/p>\n<\/div>\n

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