How Tim Cook transformed Apple's India strategy into a global manufacturing success

Explore how Apple CEO Tim Cook's strategic vision and adaptability transformed India from a challenging market into a critical global manufacturing and export hub for iPhones, significantly boosting the country's electronics sector.

He made his maiden visit to India only in May 2016 to meet Prime Minister Narendra Modi, exploring ways to expand Apple’s playbook in a market where it had a limited presence. But Tim Cook, chief executive officer (CEO) of Apple Inc, soon realised that the going would be tougher.

He dispatched teams comprising top executives from the US, UK, and UAE to present to the Indian government the preconditions required for assembling phones in the country, especially after their initial proposal to allow the import and sale of refurbished iPhones was summarily rejected.

Instead, they were asked to explore assembling iPhones locally.

However, attempts to convince the government failed.

In a written reply in the Rajya Sabha in March 2017, then Commerce and Industry Minister Nirmala Sitharaman stated that the proposal had been rejected.

The proposal included demands for duty exemptions on capital equipment, components, and consumables for smartphones, as well as for service and repair, for a period of 15 years as a condition for manufacturing iPhones in India.

Sitharaman also rejected Apple’s request for relaxation of the contentious 30 per cent local sourcing norm required for foreign direct investment (FDI) in single-brand retail.

Apple's Strategic Shift in India

Nine years later, as Cook announces he is stepping down, India accounts for one in every four iPhones assembled globally, compared to 95 per cent being produced in China in 2016.

India has also become one of the largest exporters of iPhones to the US.

In the five years of the production-linked incentive (PLI) scheme for mobile devices (FY22 to FY26), the country has produced iPhones with a total freight on board value of $70 billion.

If that were not enough, Apple has exceeded its PLI production targets by 80 per cent in value, helping electronics become the third-largest export category from India.

So how did Apple rework its faltering India strategy into a success?

After failed negotiations, Cook and his team changed tack.

By 2018, Apple decided to shift from a US-led approach to building a team of local experts aligned with government priorities.

It also chose to work closely with mobile and electronics industry associations, instead of engaging with the government independently.

This strategy paid off. After three years of arduous discussions, FDI rules for single-brand retail were tweaked.

Apple convinced the government that since it does not manufacture phones directly, the value added by its contract manufacturers should count toward "local sourcing".

In return, Apple assured the government it would not engage in predatory pricing that could harm local retailers. Its first retail store in India opened in Mumbai in 2023.

Leveraging Government Policies and Global Dynamics

The timing also worked in Apple’s favour.

The government’s push for Atmanirbhar Bharat in 2019 and its support for industry through the PLI scheme coincided with Apple’s efforts to reduce its heavy dependence on China.

Although Apple had manufacturing bases in Vietnam for wearables and iPads, Samsung already dominated the smartphone market there with multi-billion-dollar investments.

So Apple chose India as its alternative manufacturing destination.

What followed was close cooperation between the government and Apple, with Cook playing a key role in navigating global challenges — whether from tariff pressures under Donald Trump or in tweaking the India strategy to meet the Indian government’s concerns.

The PLI scheme for mobile manufacturing was approved after over 10 months of intense discussions. In several areas, Apple accommodated competitors to ensure the policy’s success.

For instance, the minimum phone value eligible for PLI was reduced from $300 to $200 to include lower-priced devices, though this did not directly benefit Apple, whose products are priced higher.

Overcoming Supply Chain Hurdles

Initially, Apple planned to bring its established Chinese suppliers to India to build the supply chain.

However, the Galwan Valley clash led India to tighten FDI rules, restricting Chinese participation in new ventures.

Despite the fact, the government aimed at an ambitious value addition target of 35-40 per cent by FY26.

The government gave some flexibility, with 12 Chinese companies cleared to form joint ventures after scrutiny.

However, during a meeting between Cook and Modi in April 2023, when Cook visited to launch Apple’s first store, concerns were raised about a China-led supply chain.

Cook responded by pivoting quickly, bringing in Indian and non-Chinese partners instead.

This strategy worked, with 40 Indian companies, including major players like Tata Electronics and Samvardhan Motherson, joining the supply chain.

However, with value addition currently at 20 per cent, Apple fell short of the government’s targets.

Navigating Global Trade and Future Challenges

Cook also negotiated global challenges that could have disrupted its progress in India.

A major challenge came during Trump’s second term, when he pushed Apple to manufacture iPhones in the US rather than India and hinted at punitive tariffs.

Currently, imports from India to the US attract zero duty.

The issue was resolved after Cook committed an additional $100 billion investments in the US, taking the total to $600 billion.

In return, Trump promised that high duties on imported chips and semiconductors would not be imposed on Apple.

Cook was also quick to capitalise on tariff differentials. He ramped up iPhone exports from India to the US in FY26, shifting capacity away from China.

India’s zero-duty advantage over China, where imports faced a 20 per cent fentanyl-related duty, made it a more attractive export base despite China’s cost advantages.

As a result, smartphone exports to the US, led by Apple, grew by 137 per cent to $15.87 billion during April-January, making them India’s largest export category to the US.

However, with the fentanyl duty now struck down by the US Supreme Court, India’s advantage vis-a-vis China does not exist anymore.

This raises key questions. Will exports to the US slow down or shift back to China?

And with that, will the rapid growth of iPhone production in India taper off?

Or will India achieve the government’s target of assembling 30 per cent of global iPhone production in the coming years?

Cook’s successor clearly has significant challenges ahead.

Making India the Global Hub

• Apple Inc exceeded the government’s cumulative PLI production target of Rs 3.35 trillion
• In FY21-FY26, achieving Rs 6.02 trillion In FY26 alone, Apple ramped up production to 55 million iPhone units, driven largely by a strong surge in exports to the US
• Apple’s ecosystem in India generated 250,000 direct jobs over PLI period
• India accounts for one in every four iPhones assembled globally, compared to 95 per cent being produced in China in 2016
• In CY25, Apple contributed 75% of India’s smartphone exports and 46% of electronics exports